Correlation Between Anthemis Digital and Compass Digital

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

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

Diversification Opportunities for Anthemis Digital and Compass Digital

0.22

Correlation Coefficient

Anthemis Digital  Compass Digital

Modest diversification

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

Pair Corralation between Anthemis Digital and Compass Digital

If you would invest  6.10  in Compass Digital Acquisition on September 13, 2024 and sell it today you would earn a total of  0.23  from holding Compass Digital Acquisition or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	10.0%
Values	Daily Returns

Anthemis Digital Acquisitions  vs.  Compass Digital Acquisition

Anthemis Digital Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anthemis Digital Acquisitions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Anthemis Digital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Compass Digital Acqu

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Compass Digital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Compass Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anthemis Digital and Compass Digital

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

The idea behind Anthemis Digital Acquisitions and Compass Digital 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.