Correlation Between Energem Corp and Digital Health

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

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

Diversification Opportunities for Energem Corp and Digital Health

0.29

Correlation Coefficient

Energem Corp  Digital Health

Modest diversification

The 3 months correlation between Energem and Digital is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Energem Corp Warrant and Digital Health Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Health Acqui and Energem Corp 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 Energem Corp Warrant are associated (or correlated) with Digital Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Health Acqui has no effect on the direction of Energem Corp i.e., Energem Corp and Digital Health go up and down completely randomly.

Pair Corralation between Energem Corp and Digital Health

Assuming the 90 days horizon Energem Corp Warrant is expected to under-perform the Digital Health. But the stock apears to be less risky and, when comparing its historical volatility, Energem Corp Warrant is 10.88 times less risky than Digital Health. The stock trades about -0.3 of its potential returns per unit of risk. The Digital Health Acquisition is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7.01  in Digital Health Acquisition on October 3, 2024 and sell it today you would earn a total of  9.99  from holding Digital Health Acquisition or generate 142.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.82%
Values	Daily Returns

Energem Corp Warrant  vs.  Digital Health Acquisition

Energem Corp Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

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

Digital Health Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Health Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Digital Health 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 Energem Corp and Digital Health

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

The idea behind Energem Corp Warrant and Digital Health 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.