Correlation Between Frontera and Coastal Capital

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

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

Diversification Opportunities for Frontera and Coastal Capital

0.0

Correlation Coefficient

Frontera  Coastal Capital

Pay attention - limited upside

The 3 months correlation between Frontera and Coastal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Frontera Group and Coastal Capital Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Capital Acq and Frontera 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 Frontera Group are associated (or correlated) with Coastal Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Capital Acq has no effect on the direction of Frontera i.e., Frontera and Coastal Capital go up and down completely randomly.

Pair Corralation between Frontera and Coastal Capital

If you would invest  0.08  in Coastal Capital Acq on October 11, 2024 and sell it today you would earn a total of  0.01  from holding Coastal Capital Acq or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Frontera Group  vs.  Coastal Capital Acq

Frontera Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontera Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Frontera is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Coastal Capital Acq

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Capital Acq are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Coastal Capital revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Frontera and Coastal Capital

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

The idea behind Frontera Group and Coastal Capital Acq 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.