Correlation Between Inflection Point and Copa Holdings

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

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

Diversification Opportunities for Inflection Point and Copa Holdings

0.72

Correlation Coefficient

Inflection Point  Copa Holdings

Poor diversification

The 3 months correlation between Inflection and Copa is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA and Inflection Point 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 Inflection Point Acquisition are associated (or correlated) with Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of Inflection Point i.e., Inflection Point and Copa Holdings go up and down completely randomly.

Pair Corralation between Inflection Point and Copa Holdings

Assuming the 90 days horizon Inflection Point is expected to generate 2.8 times less return on investment than Copa Holdings. But when comparing it to its historical volatility, Inflection Point Acquisition is 12.75 times less risky than Copa Holdings. It trades about 0.2 of its potential returns per unit of risk. Copa Holdings SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,908  in Copa Holdings SA on September 3, 2024 and sell it today you would earn a total of  429.00  from holding Copa Holdings SA or generate 4.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Inflection Point Acquisition  vs.  Copa Holdings SA

Inflection Point Acq

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Inflection Point is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Copa Holdings SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Copa Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Inflection Point and Copa Holdings

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

The idea behind Inflection Point Acquisition and Copa Holdings SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.