Correlation Between CAPP and DGTX

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both CAPP and DGTX 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 CAPP and DGTX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAPP and DGTX, you can compare the effects of market volatilities on CAPP and DGTX 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 CAPP with a short position of DGTX. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAPP and DGTX.

Diversification Opportunities for CAPP and DGTX

CAPPDGTXDiversified AwayCAPPDGTXDiversified Away100%
0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between CAPP and DGTX is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CAPP and DGTX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTX and CAPP 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 CAPP are associated (or correlated) with DGTX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGTX has no effect on the direction of CAPP i.e., CAPP and DGTX go up and down completely randomly.

Pair Corralation between CAPP and DGTX

Assuming the 90 days trading horizon CAPP is expected to generate 0.14 times more return on investment than DGTX. However, CAPP is 7.04 times less risky than DGTX. It trades about -0.07 of its potential returns per unit of risk. DGTX is currently generating about -0.23 per unit of risk. If you would invest  0.01  in CAPP on November 23, 2024 and sell it today you would lose  0.00  from holding CAPP or give up 3.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

CAPP  vs.  DGTX

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505
JavaScript chart by amCharts 3.21.15CAPP DGTX
       Timeline  
CAPP 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CAPP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, CAPP may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.00010.0001050.000110.000115
DGTX 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days DGTX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for DGTX shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb

CAPP and DGTX Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.01-6.0-3.99-1.980.01.974.06.048.0710.1 0.010.020.030.040.050.06
JavaScript chart by amCharts 3.21.15CAPP DGTX
       Returns  

Pair Trading with CAPP and DGTX

The main advantage of trading using opposite CAPP and DGTX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAPP position performs unexpectedly, DGTX 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 DGTX will offset losses from the drop in DGTX's long position.
The idea behind CAPP and DGTX 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.
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 Transaction History module to view history of all your transactions and understand their impact on performance.

Other Complementary Tools

Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance