Correlation Between ClimateRock and DMAQ Old

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

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

Diversification Opportunities for ClimateRock and DMAQ Old

0.83

Correlation Coefficient

ClimateRock  DMAQ Old

Very poor diversification

The 3 months correlation between ClimateRock and DMAQ is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ClimateRock Class A and DMAQ Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DMAQ Old and ClimateRock 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 ClimateRock Class A are associated (or correlated) with DMAQ Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DMAQ Old has no effect on the direction of ClimateRock i.e., ClimateRock and DMAQ Old go up and down completely randomly.

Pair Corralation between ClimateRock and DMAQ Old

If you would invest  1,175  in ClimateRock Class A on October 27, 2024 and sell it today you would earn a total of  9.00  from holding ClimateRock Class A or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	5.26%
Values	Daily Returns

ClimateRock Class A  vs.  DMAQ Old

ClimateRock Class

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ClimateRock Class A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ClimateRock is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

DMAQ Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DMAQ Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, DMAQ Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ClimateRock and DMAQ Old

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

The idea behind ClimateRock Class A and DMAQ 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..