Correlation Between Direct Digital and Glory Star
Can any of the company-specific risk be diversified away by investing in both Direct Digital and Glory Star 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 Direct Digital and Glory Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Digital Holdings and Glory Star New, you can compare the effects of market volatilities on Direct Digital and Glory Star 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 Direct Digital with a short position of Glory Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Digital and Glory Star.
Diversification Opportunities for Direct Digital and Glory Star
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direct and Glory is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings and Glory Star New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glory Star New and Direct 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 Direct Digital Holdings are associated (or correlated) with Glory Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glory Star New has no effect on the direction of Direct Digital i.e., Direct Digital and Glory Star go up and down completely randomly.
Pair Corralation between Direct Digital and Glory Star
Given the investment horizon of 90 days Direct Digital Holdings is expected to under-perform the Glory Star. But the stock apears to be less risky and, when comparing its historical volatility, Direct Digital Holdings is 2.83 times less risky than Glory Star. The stock trades about -0.74 of its potential returns per unit of risk. The Glory Star New is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 0.49 in Glory Star New on February 27, 2024 and sell it today you would lose (0.03) from holding Glory Star New or give up 6.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 71.43% |
Values | Daily Returns |
Direct Digital Holdings vs. Glory Star New
Performance |
Timeline |
Direct Digital Holdings |
Glory Star New |
Direct Digital and Glory Star Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direct Digital and Glory Star
The main advantage of trading using opposite Direct Digital and Glory Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Digital position performs unexpectedly, Glory Star 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 Glory Star will offset losses from the drop in Glory Star's long position.Direct Digital vs. Mirriad Advertising plc | Direct Digital vs. INEO Tech Corp | Direct Digital vs. Entravision Communications | Direct Digital vs. Cimpress NV |
Glory Star vs. Mirriad Advertising plc | Glory Star vs. INEO Tech Corp | Glory Star vs. Entravision Communications | Glory Star vs. Cimpress NV |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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