Correlation Between Neptune Digital and Digihost Technology

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

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

Diversification Opportunities for Neptune Digital and Digihost Technology

0.86

Correlation Coefficient

Neptune Digital  Digihost Technology

Very poor diversification

The 3 months correlation between Neptune and Digihost is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Neptune Digital Assets and Digihost Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digihost Technology and Neptune Digital 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 Neptune Digital Assets are associated (or correlated) with Digihost Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digihost Technology has no effect on the direction of Neptune Digital i.e., Neptune Digital and Digihost Technology go up and down completely randomly.

Pair Corralation between Neptune Digital and Digihost Technology

Assuming the 90 days horizon Neptune Digital Assets is expected to generate 2.59 times more return on investment than Digihost Technology. However, Neptune Digital is 2.59 times more volatile than Digihost Technology. It trades about 0.17 of its potential returns per unit of risk. Digihost Technology is currently generating about 0.2 per unit of risk. If you would invest  25.00  in Neptune Digital Assets on September 4, 2024 and sell it today you would earn a total of  53.00  from holding Neptune Digital Assets or generate 212.0% return on investment over 90 days.

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

Neptune Digital Assets  vs.  Digihost Technology

Neptune Digital Assets

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neptune Digital Assets are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Neptune Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Digihost Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digihost Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical indicators, Digihost Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neptune Digital and Digihost Technology

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

The idea behind Neptune Digital Assets and Digihost Technology 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..