Correlation Between Cactus Acquisition and Global Blockchain

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

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

Diversification Opportunities for Cactus Acquisition and Global Blockchain

0.04

Correlation Coefficient

Cactus Acquisition  Global Blockchain

Significant diversification

The 3 months correlation between Cactus and Global is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Acquisition Corp and Global Blockchain Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Blockchain and Cactus Acquisition 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 Cactus Acquisition Corp are associated (or correlated) with Global Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Blockchain has no effect on the direction of Cactus Acquisition i.e., Cactus Acquisition and Global Blockchain go up and down completely randomly.

Pair Corralation between Cactus Acquisition and Global Blockchain

Given the investment horizon of 90 days Cactus Acquisition Corp is expected to generate 4.19 times more return on investment than Global Blockchain. However, Cactus Acquisition is 4.19 times more volatile than Global Blockchain Acquisition. It trades about 0.13 of its potential returns per unit of risk. Global Blockchain Acquisition is currently generating about 0.07 per unit of risk. If you would invest  1,106  in Cactus Acquisition Corp on December 22, 2024 and sell it today you would earn a total of  203.00  from holding Cactus Acquisition Corp or generate 18.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Cactus Acquisition Corp  vs.  Global Blockchain Acquisition

Cactus Acquisition Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cactus Acquisition Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cactus Acquisition unveiled solid returns over the last few months and may actually be approaching a breakup point.

Global Blockchain

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blockchain Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Global Blockchain is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Cactus Acquisition and Global Blockchain

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

The idea behind Cactus Acquisition Corp and Global Blockchain 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.