Correlation Between Digital Brands and Transcode Therapeutics

Can any of the company-specific risk be diversified away by investing in both Digital Brands and Transcode Therapeutics 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 Digital Brands and Transcode Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Digital Brands and Transcode Therapeutics

-0.45

Correlation Coefficient

Digital Brands  Transcode Therapeutics

Very good diversification

The 3 months correlation between Digital and Transcode is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Digital Brands Group, and Transcode Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcode Therapeutics and Digital Brands 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 Digital Brands Group, are associated (or correlated) with Transcode Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcode Therapeutics has no effect on the direction of Digital Brands i.e., Digital Brands and Transcode Therapeutics go up and down completely randomly.

Pair Corralation between Digital Brands and Transcode Therapeutics

Given the investment horizon of 90 days Digital Brands Group, is expected to generate 1.31 times more return on investment than Transcode Therapeutics. However, Digital Brands is 1.31 times more volatile than Transcode Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Transcode Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  4,180  in Digital Brands Group, on May 28, 2025 and sell it today you would lose (3,110) from holding Digital Brands Group, or give up 74.4% of portfolio value over 90 days.

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

Digital Brands Group,  vs.  Transcode Therapeutics

Digital Brands Group,

Risk-Adjusted Performance

Weakest

Over the last 90 days Digital Brands Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Digital Brands is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Transcode Therapeutics

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Transcode Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Transcode Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digital Brands and Transcode Therapeutics

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

The idea behind Digital Brands Group, and Transcode Therapeutics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.