Correlation Between TKB Critical and DP Cap
Can any of the company-specific risk be diversified away by investing in both TKB Critical and DP Cap 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 TKB Critical and DP Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TKB Critical Technologies and DP Cap Acquisition, you can compare the effects of market volatilities on TKB Critical and DP Cap 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 TKB Critical with a short position of DP Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKB Critical and DP Cap.
Diversification Opportunities for TKB Critical and DP Cap
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TKB and DPCS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding TKB Critical Technologies and DP Cap Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DP Cap Acquisition and TKB Critical 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 TKB Critical Technologies are associated (or correlated) with DP Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DP Cap Acquisition has no effect on the direction of TKB Critical i.e., TKB Critical and DP Cap go up and down completely randomly.
Pair Corralation between TKB Critical and DP Cap
Assuming the 90 days horizon TKB Critical Technologies is expected to generate 152.65 times more return on investment than DP Cap. However, TKB Critical is 152.65 times more volatile than DP Cap Acquisition. It trades about 0.13 of its potential returns per unit of risk. DP Cap Acquisition is currently generating about 0.07 per unit of risk. If you would invest 2.99 in TKB Critical Technologies on September 1, 2024 and sell it today you would lose (1.89) from holding TKB Critical Technologies or give up 63.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 38.15% |
| Values | Daily Returns |
TKB Critical Technologies vs. DP Cap Acquisition
Performance |
| Timeline |
| TKB Critical Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| DP Cap Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
TKB Critical and DP Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TKB Critical and DP Cap
The main advantage of trading using opposite TKB Critical and DP Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKB Critical position performs unexpectedly, DP Cap 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 DP Cap will offset losses from the drop in DP Cap's long position.The idea behind TKB Critical Technologies and DP Cap 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.| DP Cap vs. A SPAC II | DP Cap vs. Athena Technology Acquisition | DP Cap vs. Hudson Acquisition I | DP Cap vs. Alpha One |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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