Correlation Between Integral Acquisition and Hennessy Capital

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

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

Diversification Opportunities for Integral Acquisition and Hennessy Capital

0.06

Correlation Coefficient

Integral Acquisition  Hennessy Capital

Significant diversification

The 3 months correlation between Integral and Hennessy is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Integral Acquisition 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 Integral Acquisition 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 Integral Acquisition 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 Integral Acquisition i.e., Integral Acquisition and Hennessy Capital go up and down completely randomly.

Pair Corralation between Integral Acquisition and Hennessy Capital

Assuming the 90 days horizon Integral Acquisition is expected to generate 1.28 times more return on investment than Hennessy Capital. However, Integral Acquisition is 1.28 times more volatile than Hennessy Capital Investment. It trades about 0.18 of its potential returns per unit of risk. Hennessy Capital Investment is currently generating about 0.18 per unit of risk. If you would invest  4.59  in Integral Acquisition on September 3, 2024 and sell it today you would lose (4.55) from holding Integral Acquisition or give up 99.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.33%
Values	Daily Returns

Integral Acquisition  vs.  Hennessy Capital Investment

Integral Acquisition

Risk-Adjusted Performance

0 of 100

Good

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

Hennessy Capital Inv

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Hennessy Capital Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal forward indicators, Hennessy Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integral Acquisition and Hennessy Capital

The main advantage of trading using opposite Integral Acquisition and Hennessy Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral Acquisition 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 Integral Acquisition 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.