Correlation Between Cincinnati Financial and Distoken Acquisition

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

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

Diversification Opportunities for Cincinnati Financial and Distoken Acquisition

0.88

Correlation Coefficient

Cincinnati Financial  Distoken Acquisition

Very poor diversification

The 3 months correlation between Cincinnati and Distoken is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition and Cincinnati Financial 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 Cincinnati Financial 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 Cincinnati Financial i.e., Cincinnati Financial and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Cincinnati Financial and Distoken Acquisition

Given the investment horizon of 90 days Cincinnati Financial is expected to under-perform the Distoken Acquisition. In addition to that, Cincinnati Financial is 2.4 times more volatile than Distoken Acquisition. It trades about -0.32 of its total potential returns per unit of risk. Distoken Acquisition is currently generating about 0.0 per unit of volatility. If you would invest  1,120  in Distoken Acquisition on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Distoken Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Cincinnati Financial  vs.  Distoken Acquisition

Cincinnati Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Cincinnati Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Distoken Acquisition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Distoken Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Distoken Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cincinnati Financial and Distoken Acquisition

The main advantage of trading using opposite Cincinnati Financial and Distoken Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial 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 Cincinnati Financial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.