Correlation Between 36Kr Holdings and Digital Ally

Can any of the company-specific risk be diversified away by investing in both 36Kr Holdings and Digital Ally 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 36Kr Holdings and Digital Ally into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 36Kr Holdings and Digital Ally, you can compare the effects of market volatilities on 36Kr Holdings and Digital Ally 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 36Kr Holdings with a short position of Digital Ally. Check out your portfolio center. Please also check ongoing floating volatility patterns of 36Kr Holdings and Digital Ally.

Diversification Opportunities for 36Kr Holdings and Digital Ally

0.66

Correlation Coefficient

36Kr Holdings  Digital Ally

Poor diversification

The 3 months correlation between 36Kr and Digital is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding 36Kr Holdings and Digital Ally in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Ally and 36Kr Holdings 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 36Kr Holdings are associated (or correlated) with Digital Ally. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Ally has no effect on the direction of 36Kr Holdings i.e., 36Kr Holdings and Digital Ally go up and down completely randomly.

Pair Corralation between 36Kr Holdings and Digital Ally

Given the investment horizon of 90 days 36Kr Holdings is expected to under-perform the Digital Ally. But the stock apears to be less risky and, when comparing its historical volatility, 36Kr Holdings is 1.12 times less risky than Digital Ally. The stock trades about -0.06 of its potential returns per unit of risk. The Digital Ally is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  114.00  in Digital Ally on September 12, 2024 and sell it today you would lose (38.90) from holding Digital Ally or give up 34.12% of portfolio value over 90 days.

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

36Kr Holdings  vs.  Digital Ally

36Kr Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 36Kr Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Digital Ally

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Ally has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with 36Kr Holdings and Digital Ally

The main advantage of trading using opposite 36Kr Holdings and Digital Ally positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 36Kr Holdings position performs unexpectedly, Digital Ally 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 Digital Ally will offset losses from the drop in Digital Ally's long position.

The idea behind 36Kr Holdings and Digital Ally 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.