Correlation Between Tinybeans Group and DGTL Holdings

Can any of the company-specific risk be diversified away by investing in both Tinybeans Group and DGTL Holdings 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 Tinybeans Group and DGTL Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tinybeans Group Limited and DGTL Holdings, you can compare the effects of market volatilities on Tinybeans Group and DGTL Holdings 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 Tinybeans Group with a short position of DGTL Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tinybeans Group and DGTL Holdings.

Diversification Opportunities for Tinybeans Group and DGTL Holdings

-0.48

Correlation Coefficient

Tinybeans Group  DGTL Holdings

Very good diversification

The 3 months correlation between Tinybeans and DGTL is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tinybeans Group Limited and DGTL Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTL Holdings and Tinybeans Group 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 Tinybeans Group Limited are associated (or correlated) with DGTL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGTL Holdings has no effect on the direction of Tinybeans Group i.e., Tinybeans Group and DGTL Holdings go up and down completely randomly.

Pair Corralation between Tinybeans Group and DGTL Holdings

Assuming the 90 days horizon Tinybeans Group Limited is expected to generate 2.46 times more return on investment than DGTL Holdings. However, Tinybeans Group is 2.46 times more volatile than DGTL Holdings. It trades about -0.05 of its potential returns per unit of risk. DGTL Holdings is currently generating about -0.27 per unit of risk. If you would invest  8.10  in Tinybeans Group Limited on January 31, 2024 and sell it today you would lose (3.10) from holding Tinybeans Group Limited or give up 38.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tinybeans Group Limited  vs.  DGTL Holdings

Tinybeans Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tinybeans Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

DGTL Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DGTL Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, DGTL Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tinybeans Group and DGTL Holdings

The main advantage of trading using opposite Tinybeans Group and DGTL Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tinybeans Group position performs unexpectedly, DGTL Holdings 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 DGTL Holdings will offset losses from the drop in DGTL Holdings' long position.

The idea behind Tinybeans Group Limited and DGTL Holdings 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.