Correlation Between Diamond Hill and Athena Technology

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

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

Diversification Opportunities for Diamond Hill and Athena Technology

0.0

Correlation Coefficient

Diamond Hill  Athena Technology

Pay attention - limited upside

The 3 months correlation between Diamond and Athena is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Athena Technology Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athena Technology and Diamond Hill 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 Diamond Hill Investment are associated (or correlated) with Athena Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athena Technology has no effect on the direction of Diamond Hill i.e., Diamond Hill and Athena Technology go up and down completely randomly.

Pair Corralation between Diamond Hill and Athena Technology

Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 0.04 times more return on investment than Athena Technology. However, Diamond Hill Investment is 22.98 times less risky than Athena Technology. It trades about -0.29 of its potential returns per unit of risk. Athena Technology Acquisition is currently generating about -0.23 per unit of risk. If you would invest  16,793  in Diamond Hill Investment on September 17, 2024 and sell it today you would lose (847.00) from holding Diamond Hill Investment or give up 5.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Diamond Hill Investment  vs.  Athena Technology Acquisition

Diamond Hill Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Diamond Hill is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Athena Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athena Technology Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Diamond Hill and Athena Technology

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

The idea behind Diamond Hill Investment and Athena Technology 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.