Correlation Between IClick Interactive and Direct Digital

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

By analyzing existing cross correlation between iClick Interactive Asia and Direct Digital Holdings, you can compare the effects of market volatilities on IClick Interactive and Direct Digital 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 IClick Interactive with a short position of Direct Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IClick Interactive and Direct Digital.

Diversification Opportunities for IClick Interactive and Direct Digital

-0.39

Correlation Coefficient

IClick Interactive  Direct Digital

Very good diversification

The 3 months correlation between IClick and Direct is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding iClick Interactive Asia and Direct Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Digital Holdings and IClick Interactive 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 iClick Interactive Asia are associated (or correlated) with Direct Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Digital Holdings has no effect on the direction of IClick Interactive i.e., IClick Interactive and Direct Digital go up and down completely randomly.

Pair Corralation between IClick Interactive and Direct Digital

Given the investment horizon of 90 days IClick Interactive is expected to generate 4.07 times less return on investment than Direct Digital. But when comparing it to its historical volatility, iClick Interactive Asia is 10.4 times less risky than Direct Digital. It trades about 0.16 of its potential returns per unit of risk. Direct Digital Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  414.00  in Direct Digital Holdings on October 26, 2024 and sell it today you would lose (270.50) from holding Direct Digital Holdings or give up 65.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

iClick Interactive Asia  vs.  Direct Digital Holdings

iClick Interactive Asia

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iClick Interactive Asia are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, IClick Interactive disclosed solid returns over the last few months and may actually be approaching a breakup point.

Direct Digital Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Direct Digital Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Direct Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IClick Interactive and Direct Digital

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

The idea behind iClick Interactive Asia and Direct Digital 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 CEOs Directory module to screen CEOs from public companies around the world.