Correlation Between Cartica Acquisition and Futuretech

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

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

Diversification Opportunities for Cartica Acquisition and Futuretech

-0.15

Correlation Coefficient

Cartica Acquisition  Futuretech

Good diversification

The 3 months correlation between Cartica and Futuretech is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cartica Acquisition Corp and Futuretech II Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futuretech II Acquisition and Cartica 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 Cartica Acquisition Corp are associated (or correlated) with Futuretech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futuretech II Acquisition has no effect on the direction of Cartica Acquisition i.e., Cartica Acquisition and Futuretech go up and down completely randomly.

Pair Corralation between Cartica Acquisition and Futuretech

Assuming the 90 days horizon Cartica Acquisition Corp is expected to under-perform the Futuretech. But the stock apears to be less risky and, when comparing its historical volatility, Cartica Acquisition Corp is 1.33 times less risky than Futuretech. The stock trades about -0.13 of its potential returns per unit of risk. The Futuretech II Acquisition is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,101  in Futuretech II Acquisition on September 4, 2024 and sell it today you would earn a total of  4.00  from holding Futuretech II Acquisition or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cartica Acquisition Corp  vs.  Futuretech II Acquisition

Cartica Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cartica Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Cartica Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Futuretech II Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futuretech II Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Futuretech is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cartica Acquisition and Futuretech

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

The idea behind Cartica Acquisition Corp and Futuretech II 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.