Correlation Between Investcorp India and Denali Capital

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

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

Diversification Opportunities for Investcorp India and Denali Capital

0.22

Correlation Coefficient

Investcorp India  Denali Capital

Modest diversification

The 3 months correlation between Investcorp and Denali is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Investcorp India Acquisition and Denali Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denali Capital Acqui and Investcorp India 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 Investcorp India Acquisition are associated (or correlated) with Denali Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denali Capital Acqui has no effect on the direction of Investcorp India i.e., Investcorp India and Denali Capital go up and down completely randomly.

Pair Corralation between Investcorp India and Denali Capital

Assuming the 90 days horizon Investcorp India Acquisition is expected to generate 2.21 times more return on investment than Denali Capital. However, Investcorp India is 2.21 times more volatile than Denali Capital Acquisition. It trades about 0.05 of its potential returns per unit of risk. Denali Capital Acquisition is currently generating about 0.03 per unit of risk. If you would invest  1,167  in Investcorp India Acquisition on December 30, 2024 and sell it today you would earn a total of  19.00  from holding Investcorp India Acquisition or generate 1.63% return on investment over 90 days.

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

Investcorp India Acquisition  vs.  Denali Capital Acquisition

Investcorp India Acq

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp India Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Investcorp India is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Denali Capital Acqui

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Denali Capital Acquisition are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Denali Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Investcorp India and Denali Capital

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

The idea behind Investcorp India Acquisition and Denali Capital 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .