Correlation Between Gitlab and DigitalOcean Holdings

Can any of the company-specific risk be diversified away by investing in both Gitlab and DigitalOcean Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Gitlab and DigitalOcean Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gitlab Inc and DigitalOcean Holdings, you can compare the effects of market volatilities on Gitlab and DigitalOcean Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gitlab with a short position of DigitalOcean Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gitlab and DigitalOcean Holdings.

Diversification Opportunities for Gitlab and DigitalOcean Holdings

0.69

Correlation Coefficient

Gitlab  DigitalOcean Holdings

Poor diversification

The 3 months correlation between Gitlab and DigitalOcean is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gitlab Inc and DigitalOcean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigitalOcean Holdings and Gitlab is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gitlab Inc are associated (or correlated) with DigitalOcean Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigitalOcean Holdings has no effect on the direction of Gitlab i.e., Gitlab and DigitalOcean Holdings go up and down completely randomly.

Pair Corralation between Gitlab and DigitalOcean Holdings

Given the investment horizon of 90 days Gitlab Inc is expected to under-perform the DigitalOcean Holdings. In addition to that, Gitlab is 1.17 times more volatile than DigitalOcean Holdings. It trades about -0.05 of its total potential returns per unit of risk. DigitalOcean Holdings is currently generating about 0.02 per unit of volatility. If you would invest  3,417  in DigitalOcean Holdings on December 30, 2024 and sell it today you would earn a total of  0.00  from holding DigitalOcean Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gitlab Inc  vs.  DigitalOcean Holdings

Gitlab Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gitlab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

DigitalOcean Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DigitalOcean Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, DigitalOcean Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gitlab and DigitalOcean Holdings

The main advantage of trading using opposite Gitlab and DigitalOcean Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gitlab position performs unexpectedly, DigitalOcean Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in DigitalOcean Holdings will offset losses from the drop in DigitalOcean Holdings' long position.

The idea behind Gitlab Inc and DigitalOcean Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.