Correlation Between DGTL Holdings and Locafy
Can any of the company-specific risk be diversified away by investing in both DGTL Holdings and Locafy 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 DGTL Holdings and Locafy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DGTL Holdings and Locafy, you can compare the effects of market volatilities on DGTL Holdings and Locafy 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 DGTL Holdings with a short position of Locafy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DGTL Holdings and Locafy.
Diversification Opportunities for DGTL Holdings and Locafy
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DGTL and Locafy is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding DGTL Holdings and Locafy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locafy and DGTL Holdings 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 DGTL Holdings are associated (or correlated) with Locafy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locafy has no effect on the direction of DGTL Holdings i.e., DGTL Holdings and Locafy go up and down completely randomly.
Pair Corralation between DGTL Holdings and Locafy
Assuming the 90 days horizon DGTL Holdings is expected to generate 7.93 times more return on investment than Locafy. However, DGTL Holdings is 7.93 times more volatile than Locafy. It trades about 0.21 of its potential returns per unit of risk. Locafy is currently generating about 0.25 per unit of risk. If you would invest 0.60 in DGTL Holdings on August 31, 2024 and sell it today you would earn a total of 1.40 from holding DGTL Holdings or generate 233.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DGTL Holdings vs. Locafy
Performance |
| Timeline |
| DGTL Holdings |
| Locafy |
DGTL Holdings and Locafy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DGTL Holdings and Locafy
The main advantage of trading using opposite DGTL Holdings and Locafy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DGTL Holdings position performs unexpectedly, Locafy 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 Locafy will offset losses from the drop in Locafy's long position.| DGTL Holdings vs. Alphabet Inc Class C | DGTL Holdings vs. Meta Platforms | DGTL Holdings vs. Tencent Holdings | DGTL Holdings vs. Tencent Holdings Ltd |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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