Correlation Between Embrace Change and Heritage Global

Can any of the company-specific risk be diversified away by investing in both Embrace Change and Heritage Global 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 Heritage Global 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 Heritage Global, you can compare the effects of market volatilities on Embrace Change and Heritage Global 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 Heritage Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Heritage Global.

Diversification Opportunities for Embrace Change and Heritage Global

-0.33

Correlation Coefficient

Embrace Change  Heritage Global

Very good diversification

The 3 months correlation between Embrace and Heritage is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Heritage Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Global 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 Heritage Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Global has no effect on the direction of Embrace Change i.e., Embrace Change and Heritage Global go up and down completely randomly.

Pair Corralation between Embrace Change and Heritage Global

Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 100.28 times more return on investment than Heritage Global. However, Embrace Change is 100.28 times more volatile than Heritage Global. It trades about 0.18 of its potential returns per unit of risk. Heritage Global is currently generating about 0.03 per unit of risk. If you would invest  2.99  in Embrace Change Acquisition on September 3, 2024 and sell it today you would lose (2.11) from holding Embrace Change Acquisition or give up 70.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.25%
Values	Daily Returns

Embrace Change Acquisition  vs.  Heritage Global

Embrace Change Acqui

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Embrace Change showed solid returns over the last few months and may actually be approaching a breakup point.

Heritage Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heritage Global are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Heritage Global 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 Embrace Change and Heritage Global

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

The idea behind Embrace Change Acquisition and Heritage Global 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.