Correlation Between High Liner and DGTL Holdings

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

By analyzing existing cross correlation between High Liner Foods and DGTL Holdings, you can compare the effects of market volatilities on High Liner and DGTL 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 High Liner with a short position of DGTL Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and DGTL Holdings.

Diversification Opportunities for High Liner and DGTL Holdings

-0.44

Correlation Coefficient

High Liner  DGTL Holdings

Very good diversification

The 3 months correlation between High and DGTL is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and DGTL Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTL Holdings and High Liner 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 High Liner Foods are associated (or correlated) with DGTL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGTL Holdings has no effect on the direction of High Liner i.e., High Liner and DGTL Holdings go up and down completely randomly.

Pair Corralation between High Liner and DGTL Holdings

Assuming the 90 days trading horizon High Liner is expected to generate 50.81 times less return on investment than DGTL Holdings. But when comparing it to its historical volatility, High Liner Foods is 72.12 times less risky than DGTL Holdings. It trades about 0.13 of its potential returns per unit of risk. DGTL Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15.00  in DGTL Holdings on September 21, 2024 and sell it today you would lose (10.50) from holding DGTL Holdings or give up 70.0% of portfolio value over 90 days.

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

High Liner Foods  vs.  DGTL Holdings

High Liner Foods

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in High Liner Foods are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, High Liner displayed solid returns over the last few months and may actually be approaching a breakup point.

DGTL Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DGTL Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with High Liner and DGTL Holdings

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

The idea behind High Liner Foods and DGTL 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.