Correlation Between Athena Technology and A SPAC

Can any of the company-specific risk be diversified away by investing in both Athena Technology and A SPAC 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 A SPAC 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 A SPAC II, you can compare the effects of market volatilities on Athena Technology and A SPAC 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 A SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athena Technology and A SPAC.

Diversification Opportunities for Athena Technology and A SPAC

-0.54

Correlation Coefficient

Athena Technology  A SPAC

Excellent diversification

The 3 months correlation between Athena and ASCB is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Athena Technology Acquisition and A SPAC II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A SPAC II 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 A SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A SPAC II has no effect on the direction of Athena Technology i.e., Athena Technology and A SPAC go up and down completely randomly.

Pair Corralation between Athena Technology and A SPAC

Given the investment horizon of 90 days Athena Technology Acquisition is expected to generate 10.7 times more return on investment than A SPAC. However, Athena Technology is 10.7 times more volatile than A SPAC II. It trades about 0.04 of its potential returns per unit of risk. A SPAC II is currently generating about -0.13 per unit of risk. If you would invest  1,144  in Athena Technology Acquisition on September 2, 2024 and sell it today you would earn a total of  48.00  from holding Athena Technology Acquisition or generate 4.2% return on investment over 90 days.

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

Athena Technology Acquisition  vs.  A SPAC II

Athena Technology

Risk-Adjusted Performance

3 of 100

Insignificant

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.

A SPAC II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A SPAC II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, A SPAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Athena Technology and A SPAC

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

The idea behind Athena Technology Acquisition and A SPAC II 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.