Correlation Between Direct Digital and Metalpha Technology

Can any of the company-specific risk be diversified away by investing in both Direct Digital and Metalpha 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 Direct Digital and Metalpha Technology 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 Metalpha Technology Holding, you can compare the effects of market volatilities on Direct Digital and Metalpha 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 Direct Digital with a short position of Metalpha Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Digital and Metalpha Technology.

Diversification Opportunities for Direct Digital and Metalpha Technology

-0.4

Correlation Coefficient

Direct Digital  Metalpha Technology

Very good diversification

The 3 months correlation between Direct and Metalpha is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings and Metalpha Technology Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalpha Technology 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 Metalpha Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalpha Technology has no effect on the direction of Direct Digital i.e., Direct Digital and Metalpha Technology go up and down completely randomly.

Pair Corralation between Direct Digital and Metalpha Technology

Given the investment horizon of 90 days Direct Digital is expected to generate 5.6 times less return on investment than Metalpha Technology. In addition to that, Direct Digital is 1.82 times more volatile than Metalpha Technology Holding. It trades about 0.01 of its total potential returns per unit of risk. Metalpha Technology Holding is currently generating about 0.15 per unit of volatility. If you would invest  182.00  in Metalpha Technology Holding on April 20, 2025 and sell it today you would earn a total of  150.00  from holding Metalpha Technology Holding or generate 82.42% return on investment over 90 days.

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

Direct Digital Holdings  vs.  Metalpha Technology Holding

Direct Digital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direct Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Direct Digital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Metalpha Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Metalpha Technology Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Metalpha Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direct Digital and Metalpha Technology

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

The idea behind Direct Digital Holdings and Metalpha Technology Holding 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.