Correlation Between Athena Technology and M3 Brigade

Can any of the company-specific risk be diversified away by investing in both Athena Technology and M3 Brigade 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 M3 Brigade 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 M3 Brigade Acquisition, you can compare the effects of market volatilities on Athena Technology and M3 Brigade 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 M3 Brigade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athena Technology and M3 Brigade.

Diversification Opportunities for Athena Technology and M3 Brigade

0.0

Correlation Coefficient

Athena Technology  M3 Brigade

Pay attention - limited upside

The 3 months correlation between Athena and MBSC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Athena Technology Acquisition and M3 Brigade Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Brigade 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 M3 Brigade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Brigade Acquisition has no effect on the direction of Athena Technology i.e., Athena Technology and M3 Brigade go up and down completely randomly.

Pair Corralation between Athena Technology and M3 Brigade

If you would invest (100.00) in M3 Brigade Acquisition on December 2, 2024 and sell it today you would earn a total of  100.00  from holding M3 Brigade Acquisition or generate -100.0% return on investment over 90 days.

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

Athena Technology Acquisition  vs.  M3 Brigade Acquisition

Athena Technology

Risk-Adjusted Performance

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 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.

M3 Brigade Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days M3 Brigade Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, M3 Brigade is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Athena Technology and M3 Brigade

The main advantage of trading using opposite Athena Technology and M3 Brigade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athena Technology position performs unexpectedly, M3 Brigade 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 M3 Brigade will offset losses from the drop in M3 Brigade's long position.

The idea behind Athena Technology Acquisition and M3 Brigade 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.