Correlation Between DP Cap and Centurion Acquisition

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

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

Diversification Opportunities for DP Cap and Centurion Acquisition

0.74

Correlation Coefficient

DP Cap  Centurion Acquisition

Poor diversification

The 3 months correlation between DPCS and Centurion is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DP Cap Acquisition and Centurion Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centurion Acquisition and DP Cap 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 DP Cap Acquisition are associated (or correlated) with Centurion Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centurion Acquisition has no effect on the direction of DP Cap i.e., DP Cap and Centurion Acquisition go up and down completely randomly.

Pair Corralation between DP Cap and Centurion Acquisition

Given the investment horizon of 90 days DP Cap Acquisition is expected to generate 0.17 times more return on investment than Centurion Acquisition. However, DP Cap Acquisition is 5.9 times less risky than Centurion Acquisition. It trades about 0.11 of its potential returns per unit of risk. Centurion Acquisition Corp is currently generating about -0.12 per unit of risk. If you would invest  1,138  in DP Cap Acquisition on September 17, 2024 and sell it today you would earn a total of  122.00  from holding DP Cap Acquisition or generate 10.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	73.85%
Values	Daily Returns

DP Cap Acquisition  vs.  Centurion Acquisition Corp

DP Cap Acquisition

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days DP Cap Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak fundamental indicators, DP Cap unveiled solid returns over the last few months and may actually be approaching a breakup point.

Centurion Acquisition

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Centurion Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DP Cap and Centurion Acquisition

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

The idea behind DP Cap Acquisition and Centurion 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.