Correlation Between Denali Capital and CF Acquisition

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

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

Diversification Opportunities for Denali Capital and CF Acquisition

0.46

Correlation Coefficient

Denali Capital  CF Acquisition

Very weak diversification

The 3 months correlation between Denali and CFIVW is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Denali Capital Acquisition and CF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition Corp and Denali Capital 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 Denali Capital Acquisition are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition Corp has no effect on the direction of Denali Capital i.e., Denali Capital and CF Acquisition go up and down completely randomly.

Pair Corralation between Denali Capital and CF Acquisition

Given the investment horizon of 90 days Denali Capital is expected to generate 1.38 times less return on investment than CF Acquisition. But when comparing it to its historical volatility, Denali Capital Acquisition is 1.35 times less risky than CF Acquisition. It trades about 0.03 of its potential returns per unit of risk. CF Acquisition Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8.00  in CF Acquisition Corp on September 30, 2024 and sell it today you would earn a total of  0.00  from holding CF Acquisition Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	2.95%
Values	Daily Returns

Denali Capital Acquisition  vs.  CF Acquisition Corp

Denali Capital Acqui

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Denali Capital Acquisition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Denali Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CF Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Denali Capital and CF Acquisition

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

The idea behind Denali Capital Acquisition and CF Acquisition Corp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.