Correlation Between Athena Technology and DP Cap

Can any of the company-specific risk be diversified away by investing in both Athena Technology and DP Cap 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 Athena Technology and DP Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Athena Technology Acquisition and DP Cap Acquisition, you can compare the effects of market volatilities on Athena Technology and DP Cap 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 Athena Technology with a short position of DP Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athena Technology and DP Cap.

Diversification Opportunities for Athena Technology and DP Cap

0.25

Correlation Coefficient

Athena Technology  DP Cap

Modest diversification

The 3 months correlation between Athena and DPCS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Athena Technology Acquisition and DP Cap Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DP Cap Acquisition and Athena Technology 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 Athena Technology Acquisition are associated (or correlated) with DP Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DP Cap Acquisition has no effect on the direction of Athena Technology i.e., Athena Technology and DP Cap go up and down completely randomly.

Pair Corralation between Athena Technology and DP Cap

Given the investment horizon of 90 days Athena Technology is expected to generate 2.16 times less return on investment than DP Cap. In addition to that, Athena Technology is 1.19 times more volatile than DP Cap Acquisition. It trades about 0.04 of its total potential returns per unit of risk. DP Cap Acquisition is currently generating about 0.1 per unit of volatility. If you would invest  1,138  in DP Cap Acquisition on August 31, 2024 and sell it today you would earn a total of  122.00  from holding DP Cap Acquisition or generate 10.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

Athena Technology Acquisition  vs.  DP Cap Acquisition

Athena Technology

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Athena Technology Acquisition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Athena Technology is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

DP Cap Acquisition

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days DP Cap Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak fundamental indicators, DP Cap may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Athena Technology and DP Cap

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

The idea behind Athena Technology Acquisition and DP Cap Acquisition 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.