Correlation Between Total Energy and Digihost Technology

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

Diversification Opportunities for Total Energy and Digihost Technology

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Total and Digihost is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Total Energy Services and Digihost Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digihost Technology and Total Energy 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 Total Energy Services 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 Total Energy i.e., Total Energy and Digihost Technology go up and down completely randomly.

Pair Corralation between Total Energy and Digihost Technology

Assuming the 90 days trading horizon Total Energy is expected to generate 2.42 times less return on investment than Digihost Technology. But when comparing it to its historical volatility, Total Energy Services is 3.21 times less risky than Digihost Technology. It trades about 0.12 of its potential returns per unit of risk. Digihost Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  175.00  in Digihost Technology on August 29, 2024 and sell it today you would earn a total of  91.00  from holding Digihost Technology or generate 52.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Total Energy Services  vs.  Digihost Technology

 Performance 
       Timeline  
Total Energy Services 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Total Energy Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Total Energy displayed solid returns over the last few months and may actually be approaching a breakup point.
Digihost Technology 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Digihost Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, Digihost Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Total Energy and Digihost Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Total Energy and Digihost Technology

The main advantage of trading using opposite Total Energy and Digihost Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Energy 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 Total Energy Services 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.
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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