Correlation Between Data Knights and Dune Acquisition

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

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

Diversification Opportunities for Data Knights and Dune Acquisition

0.07

Correlation Coefficient

Data Knights  Dune Acquisition

Significant diversification

The 3 months correlation between Data and Dune is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Data Knights Acquisition and Dune Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dune Acquisition and Data Knights 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 Data Knights Acquisition are associated (or correlated) with Dune Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dune Acquisition has no effect on the direction of Data Knights i.e., Data Knights and Dune Acquisition go up and down completely randomly.

Pair Corralation between Data Knights and Dune Acquisition

Assuming the 90 days horizon Data Knights is expected to generate 121.4 times less return on investment than Dune Acquisition. But when comparing it to its historical volatility, Data Knights Acquisition is 114.88 times less risky than Dune Acquisition. It trades about 0.15 of its potential returns per unit of risk. Dune Acquisition is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2.01  in Dune Acquisition on September 14, 2024 and sell it today you would earn a total of  4.99  from holding Dune Acquisition or generate 248.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	56.25%
Values	Daily Returns

Data Knights Acquisition  vs.  Dune Acquisition

Data Knights Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dune Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dune Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Dune Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Data Knights and Dune Acquisition

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

The idea behind Data Knights Acquisition and Dune 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.