Correlation Between Digital Transformation and Hennessy Capital

Can any of the company-specific risk be diversified away by investing in both Digital Transformation and Hennessy Capital 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 Digital Transformation and Hennessy Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Digital Transformation Opportunities and Hennessy Capital Investment, you can compare the effects of market volatilities on Digital Transformation and Hennessy Capital 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 Digital Transformation with a short position of Hennessy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Transformation and Hennessy Capital.

Diversification Opportunities for Digital Transformation and Hennessy Capital

0.32

Correlation Coefficient

Digital Transformation  Hennessy Capital

Weak diversification

The 3 months correlation between Digital and Hennessy is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Digital Transformation Opportu and Hennessy Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Capital Inv and Digital Transformation 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 Digital Transformation Opportunities are associated (or correlated) with Hennessy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Capital Inv has no effect on the direction of Digital Transformation i.e., Digital Transformation and Hennessy Capital go up and down completely randomly.

Pair Corralation between Digital Transformation and Hennessy Capital

If you would invest  1,051  in Hennessy Capital Investment on October 10, 2024 and sell it today you would earn a total of  13.00  from holding Hennessy Capital Investment or generate 1.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.64%
Values	Daily Returns

Digital Transformation Opportu  vs.  Hennessy Capital Investment

Digital Transformation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hennessy Capital Inv

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Capital Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Hennessy Capital is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Digital Transformation and Hennessy Capital

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

The idea behind Digital Transformation Opportunities and Hennessy Capital Investment 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.