Correlation Between Gores Holdings and Cartica Acquisition

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

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

Diversification Opportunities for Gores Holdings and Cartica Acquisition

-0.93

Correlation Coefficient

Gores Holdings  Cartica Acquisition

Pay attention - limited upside

The 3 months correlation between Gores and Cartica is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Gores Holdings IX and Cartica Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartica Acquisition Corp and Gores Holdings 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 Gores Holdings IX are associated (or correlated) with Cartica Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartica Acquisition Corp has no effect on the direction of Gores Holdings i.e., Gores Holdings and Cartica Acquisition go up and down completely randomly.

Pair Corralation between Gores Holdings and Cartica Acquisition

Assuming the 90 days horizon Gores Holdings is expected to generate 6.29 times less return on investment than Cartica Acquisition. In addition to that, Gores Holdings is 1.95 times more volatile than Cartica Acquisition Corp. It trades about 0.0 of its total potential returns per unit of risk. Cartica Acquisition Corp is currently generating about 0.04 per unit of volatility. If you would invest  1,080  in Cartica Acquisition Corp on October 6, 2024 and sell it today you would earn a total of  90.00  from holding Cartica Acquisition Corp or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.5%
Values	Daily Returns

Gores Holdings IX  vs.  Cartica Acquisition Corp

Gores Holdings IX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gores Holdings IX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gores Holdings is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cartica Acquisition Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cartica Acquisition Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Cartica Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gores Holdings and Cartica Acquisition

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

The idea behind Gores Holdings IX and Cartica 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.