Correlation Between Gitlab and DigiAsia Corp

Can any of the company-specific risk be diversified away by investing in both Gitlab and DigiAsia Corp 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 DigiAsia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gitlab Inc and DigiAsia Corp, you can compare the effects of market volatilities on Gitlab and DigiAsia Corp 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 DigiAsia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gitlab and DigiAsia Corp.

Diversification Opportunities for Gitlab and DigiAsia Corp

-0.7

Correlation Coefficient

Gitlab  DigiAsia Corp

Excellent diversification

The 3 months correlation between Gitlab and DigiAsia is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gitlab Inc and DigiAsia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiAsia Corp 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 DigiAsia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiAsia Corp has no effect on the direction of Gitlab i.e., Gitlab and DigiAsia Corp go up and down completely randomly.

Pair Corralation between Gitlab and DigiAsia Corp

Given the investment horizon of 90 days Gitlab Inc is expected to generate 0.29 times more return on investment than DigiAsia Corp. However, Gitlab Inc is 3.39 times less risky than DigiAsia Corp. It trades about 0.17 of its potential returns per unit of risk. DigiAsia Corp is currently generating about -0.04 per unit of risk. If you would invest  4,468  in Gitlab Inc on September 1, 2024 and sell it today you would earn a total of  1,907  from holding Gitlab Inc or generate 42.68% return on investment over 90 days.

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

Gitlab Inc  vs.  DigiAsia Corp

Gitlab Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gitlab Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Gitlab sustained solid returns over the last few months and may actually be approaching a breakup point.

DigiAsia Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigiAsia Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Gitlab and DigiAsia Corp

The main advantage of trading using opposite Gitlab and DigiAsia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gitlab position performs unexpectedly, DigiAsia Corp 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 DigiAsia Corp will offset losses from the drop in DigiAsia Corp's long position.

The idea behind Gitlab Inc and DigiAsia Corp 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.