Correlation Between Power Digital and Athena Technology
Can any of the company-specific risk be diversified away by investing in both Power Digital and Athena Technology 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 Power Digital and Athena Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Digital Infrastructure and Athena Technology Acquisition, you can compare the effects of market volatilities on Power Digital and Athena Technology 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 Power Digital with a short position of Athena Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Digital and Athena Technology.
Diversification Opportunities for Power Digital and Athena Technology
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Power and Athena is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Power Digital Infrastructure and Athena Technology Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athena Technology and Power Digital 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 Power Digital Infrastructure are associated (or correlated) with Athena Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athena Technology has no effect on the direction of Power Digital i.e., Power Digital and Athena Technology go up and down completely randomly.
Pair Corralation between Power Digital and Athena Technology
Assuming the 90 days horizon Power Digital Infrastructure is expected to generate 0.85 times more return on investment than Athena Technology. However, Power Digital Infrastructure is 1.18 times less risky than Athena Technology. It trades about 0.06 of its potential returns per unit of risk. Athena Technology Acquisition is currently generating about 0.04 per unit of risk. If you would invest 1,036 in Power Digital Infrastructure on September 2, 2024 and sell it today you would earn a total of 15.00 from holding Power Digital Infrastructure or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 6.99% |
| Values | Daily Returns |
Power Digital Infrastructure vs. Athena Technology Acquisition
Performance |
| Timeline |
| Power Digital Infras |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Athena Technology |
Power Digital and Athena Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Digital and Athena Technology
The main advantage of trading using opposite Power Digital and Athena Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Digital position performs unexpectedly, Athena Technology 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 Athena Technology will offset losses from the drop in Athena Technology's long position.The idea behind Power Digital Infrastructure and Athena Technology 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.| Athena Technology vs. Alpha Star Acquisition | Athena Technology vs. Alpha One | Athena Technology vs. A SPAC II |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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