Correlation Between Metalpha Technology and DGTL Holdings

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

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

Diversification Opportunities for Metalpha Technology and DGTL Holdings

0.59

Correlation Coefficient

Metalpha Technology  DGTL Holdings

Very weak diversification

The 3 months correlation between Metalpha and DGTL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Metalpha Technology Holding and DGTL Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTL Holdings and Metalpha Technology 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 Metalpha Technology Holding 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 Metalpha Technology i.e., Metalpha Technology and DGTL Holdings go up and down completely randomly.

Pair Corralation between Metalpha Technology and DGTL Holdings

Given the investment horizon of 90 days Metalpha Technology is expected to generate 32.4 times less return on investment than DGTL Holdings. But when comparing it to its historical volatility, Metalpha Technology Holding is 14.31 times less risky than DGTL Holdings. It trades about 0.04 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  57.00  in DGTL Holdings on December 2, 2024 and sell it today you would lose (55.00) from holding DGTL Holdings or give up 96.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Metalpha Technology Holding  vs.  DGTL Holdings

Metalpha Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metalpha Technology Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Metalpha Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

DGTL Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DGTL Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, DGTL Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalpha Technology and DGTL Holdings

The main advantage of trading using opposite Metalpha Technology and DGTL Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalpha Technology 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 Metalpha Technology Holding 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.