Correlation Between Lion Group and DigiMax Global

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

By analyzing existing cross correlation between Lion Group Holding and DigiMax Global, you can compare the effects of market volatilities on Lion Group and DigiMax Global 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 Lion Group with a short position of DigiMax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Group and DigiMax Global.

Diversification Opportunities for Lion Group and DigiMax Global

0.27

Correlation Coefficient

Lion Group  DigiMax Global

Modest diversification

The 3 months correlation between Lion and DigiMax is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lion Group Holding and DigiMax Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiMax Global and Lion Group 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 Lion Group Holding are associated (or correlated) with DigiMax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiMax Global has no effect on the direction of Lion Group i.e., Lion Group and DigiMax Global go up and down completely randomly.

Pair Corralation between Lion Group and DigiMax Global

Given the investment horizon of 90 days Lion Group Holding is expected to generate 0.37 times more return on investment than DigiMax Global. However, Lion Group Holding is 2.71 times less risky than DigiMax Global. It trades about 0.0 of its potential returns per unit of risk. DigiMax Global is currently generating about -0.04 per unit of risk. If you would invest  21.00  in Lion Group Holding on September 4, 2024 and sell it today you would lose (3.00) from holding Lion Group Holding or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Lion Group Holding  vs.  DigiMax Global

Lion Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Lion Group is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

DigiMax Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigiMax Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lion Group and DigiMax Global

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

The idea behind Lion Group Holding and DigiMax Global 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.