Correlation Between Athena Technology and HNR Acquisition

Can any of the company-specific risk be diversified away by investing in both Athena Technology and HNR 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 Athena Technology and HNR Acquisition 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 HNR Acquisition Corp, you can compare the effects of market volatilities on Athena Technology and HNR 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 Athena Technology with a short position of HNR Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athena Technology and HNR Acquisition.

Diversification Opportunities for Athena Technology and HNR Acquisition

0.63

Correlation Coefficient

Athena Technology  HNR Acquisition

Poor diversification

The 3 months correlation between Athena and HNR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Athena Technology Acquisition and HNR Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNR Acquisition Corp 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 HNR Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNR Acquisition Corp has no effect on the direction of Athena Technology i.e., Athena Technology and HNR Acquisition go up and down completely randomly.

Pair Corralation between Athena Technology and HNR Acquisition

Given the investment horizon of 90 days Athena Technology Acquisition is expected to generate 1.31 times more return on investment than HNR Acquisition. However, Athena Technology is 1.31 times more volatile than HNR Acquisition Corp. It trades about -0.09 of its potential returns per unit of risk. HNR Acquisition Corp is currently generating about -0.29 per unit of risk. If you would invest  1,139  in Athena Technology Acquisition on September 21, 2024 and sell it today you would lose (1,039) from holding Athena Technology Acquisition or give up 91.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	39.62%
Values	Daily Returns

Athena Technology Acquisition  vs.  HNR Acquisition Corp

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 abnormal 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.

HNR Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HNR Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HNR Acquisition 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 HNR Acquisition

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

The idea behind Athena Technology Acquisition and HNR Acquisition Corp 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.