Correlation Between Applied Digital and Netcapital
Can any of the company-specific risk be diversified away by investing in both Applied Digital and Netcapital 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 Applied Digital and Netcapital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Digital and Netcapital, you can compare the effects of market volatilities on Applied Digital and Netcapital 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 Applied Digital with a short position of Netcapital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Digital and Netcapital.
Diversification Opportunities for Applied Digital and Netcapital
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and Netcapital is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Netcapital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcapital and Applied 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 Applied Digital are associated (or correlated) with Netcapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcapital has no effect on the direction of Applied Digital i.e., Applied Digital and Netcapital go up and down completely randomly.
Pair Corralation between Applied Digital and Netcapital
Given the investment horizon of 90 days Applied Digital is expected to generate 1.47 times more return on investment than Netcapital. However, Applied Digital is 1.47 times more volatile than Netcapital. It trades about 0.17 of its potential returns per unit of risk. Netcapital is currently generating about -0.07 per unit of risk. If you would invest 792.00 in Applied Digital on October 24, 2024 and sell it today you would earn a total of 149.00 from holding Applied Digital or generate 18.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Digital vs. Netcapital
Performance |
| Timeline |
| Applied Digital |
| Netcapital |
Applied Digital and Netcapital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Digital and Netcapital
The main advantage of trading using opposite Applied Digital and Netcapital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Digital position performs unexpectedly, Netcapital 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 Netcapital will offset losses from the drop in Netcapital's long position.| Applied Digital vs. Magic Empire Global | Applied Digital vs. Zhong Yang Financial | Applied Digital vs. Netcapital | Applied Digital vs. Lazard |
| Netcapital vs. Applied Digital | Netcapital vs. Zhong Yang Financial | Netcapital vs. Magic Empire Global | Netcapital vs. Lazard |
Check out your portfolio center.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.
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