Correlation Between Associated Capital and Distoken Acquisition

Can any of the company-specific risk be diversified away by investing in both Associated Capital and Distoken Acquisition 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 Associated Capital and Distoken Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Associated Capital and Distoken Acquisition

-0.25

Correlation Coefficient

Associated Capital  Distoken Acquisition

Very good diversification

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

Pair Corralation between Associated Capital and Distoken Acquisition

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 12.47 times less return on investment than Distoken Acquisition. But when comparing it to its historical volatility, Associated Capital Group is 7.34 times less risky than Distoken Acquisition. It trades about 0.04 of its potential returns per unit of risk. Distoken Acquisition is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.40  in Distoken Acquisition on December 1, 2024 and sell it today you would earn a total of  0.09  from holding Distoken Acquisition or generate 3.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Associated Capital Group  vs.  Distoken Acquisition

Associated Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Distoken Acquisition

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Distoken Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Distoken Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated Capital and Distoken Acquisition

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

The idea behind Associated Capital Group and Distoken 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.