Correlation Between Pono Capital and Hawks Acquisition

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Can any of the company-specific risk be diversified away by investing in both Pono Capital and Hawks 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 Pono Capital and Hawks Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pono Capital Two and Hawks Acquisition Corp, you can compare the effects of market volatilities on Pono Capital and Hawks 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 Pono Capital with a short position of Hawks Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pono Capital and Hawks Acquisition.

Diversification Opportunities for Pono Capital and Hawks Acquisition

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Pono and Hawks is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pono Capital Two and Hawks Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawks Acquisition Corp and Pono Capital 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 Pono Capital Two are associated (or correlated) with Hawks Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawks Acquisition Corp has no effect on the direction of Pono Capital i.e., Pono Capital and Hawks Acquisition go up and down completely randomly.

Pair Corralation between Pono Capital and Hawks Acquisition

Assuming the 90 days horizon Pono Capital Two is expected to generate 13.17 times more return on investment than Hawks Acquisition. However, Pono Capital is 13.17 times more volatile than Hawks Acquisition Corp. It trades about 0.03 of its potential returns per unit of risk. Hawks Acquisition Corp is currently generating about 0.08 per unit of risk. If you would invest  1,030  in Pono Capital Two on September 6, 2024 and sell it today you would earn a total of  170.00  from holding Pono Capital Two or generate 16.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy32.05%
ValuesDaily Returns

Pono Capital Two  vs.  Hawks Acquisition Corp

 Performance 
       Timeline  
Pono Capital Two 

Risk-Adjusted Performance

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Strong
Excellent
Over the last 90 days Pono Capital Two has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Pono Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.
Hawks Acquisition Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hawks Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Hawks Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pono Capital and Hawks Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pono Capital and Hawks Acquisition

The main advantage of trading using opposite Pono Capital and Hawks Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pono Capital position performs unexpectedly, Hawks 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 Hawks Acquisition will offset losses from the drop in Hawks Acquisition's long position.
The idea behind Pono Capital Two and Hawks 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.
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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