Correlation Between ActiveOps PLC and Dotdigital Group

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

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

Diversification Opportunities for ActiveOps PLC and Dotdigital Group

-0.59

Correlation Coefficient

ActiveOps PLC  Dotdigital Group

Excellent diversification

The 3 months correlation between ActiveOps and Dotdigital is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ActiveOps PLC and Dotdigital Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dotdigital Group Plc and ActiveOps PLC 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 ActiveOps PLC are associated (or correlated) with Dotdigital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dotdigital Group Plc has no effect on the direction of ActiveOps PLC i.e., ActiveOps PLC and Dotdigital Group go up and down completely randomly.

Pair Corralation between ActiveOps PLC and Dotdigital Group

Assuming the 90 days trading horizon ActiveOps PLC is expected to generate 1.24 times more return on investment than Dotdigital Group. However, ActiveOps PLC is 1.24 times more volatile than Dotdigital Group Plc. It trades about 0.38 of its potential returns per unit of risk. Dotdigital Group Plc is currently generating about -0.02 per unit of risk. If you would invest  9,650  in ActiveOps PLC on April 24, 2025 and sell it today you would earn a total of  8,600  from holding ActiveOps PLC or generate 89.12% return on investment over 90 days.

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

ActiveOps PLC  vs.  Dotdigital Group Plc

ActiveOps PLC

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ActiveOps PLC are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, ActiveOps PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dotdigital Group Plc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ActiveOps PLC and Dotdigital Group

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

The idea behind ActiveOps PLC and Dotdigital Group Plc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.