Correlation Between A SPAC and EMLD Old

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

By analyzing existing cross correlation between A SPAC II and EMLD Old, you can compare the effects of market volatilities on A SPAC and EMLD Old 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 A SPAC with a short position of EMLD Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of A SPAC and EMLD Old.

Diversification Opportunities for A SPAC and EMLD Old

-0.3

Correlation Coefficient

A SPAC  EMLD Old

Very good diversification

The 3 months correlation between ASCB and EMLD is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding A SPAC II and EMLD Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMLD Old and A SPAC 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 A SPAC II are associated (or correlated) with EMLD Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMLD Old has no effect on the direction of A SPAC i.e., A SPAC and EMLD Old go up and down completely randomly.

Pair Corralation between A SPAC and EMLD Old

Given the investment horizon of 90 days A SPAC is expected to generate 1.11 times less return on investment than EMLD Old. In addition to that, A SPAC is 3.72 times more volatile than EMLD Old. It trades about 0.02 of its total potential returns per unit of risk. EMLD Old is currently generating about 0.08 per unit of volatility. If you would invest  1,011  in EMLD Old on October 11, 2024 and sell it today you would earn a total of  87.00  from holding EMLD Old or generate 8.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.38%
Values	Daily Returns

A SPAC II  vs.  EMLD Old

A SPAC II

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in A SPAC II are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, A SPAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

EMLD Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMLD Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, EMLD Old is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with A SPAC and EMLD Old

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

The idea behind A SPAC II and EMLD Old 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.