Correlation Between Pono Capital and Investcorp Europe

Can any of the company-specific risk be diversified away by investing in both Pono Capital and Investcorp Europe 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 Investcorp Europe 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 Investcorp Europe Acquisition, you can compare the effects of market volatilities on Pono Capital and Investcorp Europe 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 Investcorp Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pono Capital and Investcorp Europe.

Diversification Opportunities for Pono Capital and Investcorp Europe

-0.57

Correlation Coefficient

Pono Capital  Investcorp Europe

Excellent diversification

The 3 months correlation between Pono and Investcorp is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pono Capital Two and Investcorp Europe Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Europe 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 Investcorp Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Europe has no effect on the direction of Pono Capital i.e., Pono Capital and Investcorp Europe go up and down completely randomly.

Pair Corralation between Pono Capital and Investcorp Europe

If you would invest  1,155  in Investcorp Europe Acquisition on September 18, 2024 and sell it today you would earn a total of  9.00  from holding Investcorp Europe Acquisition or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Pono Capital Two  vs.  Investcorp Europe Acquisition

Pono Capital Two

Risk-Adjusted Performance

0 of 100

Very Weak

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 stable basic indicators, Pono Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Investcorp Europe

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Europe Acquisition are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Investcorp Europe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pono Capital and Investcorp Europe

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

The idea behind Pono Capital Two and Investcorp Europe 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.