Correlation Between Embrace Change and Solowin Holdings

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

By analyzing existing cross correlation between Embrace Change Acquisition and Solowin Holdings Ordinary, you can compare the effects of market volatilities on Embrace Change and Solowin Holdings 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 Embrace Change with a short position of Solowin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Solowin Holdings.

Diversification Opportunities for Embrace Change and Solowin Holdings

-0.55

Correlation Coefficient

Embrace Change  Solowin Holdings

Excellent diversification

The 3 months correlation between Embrace and Solowin is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Solowin Holdings Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solowin Holdings Ordinary and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Solowin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solowin Holdings Ordinary has no effect on the direction of Embrace Change i.e., Embrace Change and Solowin Holdings go up and down completely randomly.

Pair Corralation between Embrace Change and Solowin Holdings

Given the investment horizon of 90 days Embrace Change is expected to generate 6.04 times less return on investment than Solowin Holdings. But when comparing it to its historical volatility, Embrace Change Acquisition is 27.26 times less risky than Solowin Holdings. It trades about 0.08 of its potential returns per unit of risk. Solowin Holdings Ordinary is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Solowin Holdings Ordinary on September 4, 2024 and sell it today you would lose (10.00) from holding Solowin Holdings Ordinary or give up 3.94% of portfolio value over 90 days.

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

Embrace Change Acquisition  vs.  Solowin Holdings Ordinary

Embrace Change Acqui

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Embrace Change is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Solowin Holdings Ordinary

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solowin Holdings Ordinary are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Solowin Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Embrace Change and Solowin Holdings

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

The idea behind Embrace Change Acquisition and Solowin Holdings Ordinary 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.