Correlation Between Inflection Point and Roadzen

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

Diversification Opportunities for Inflection Point and Roadzen

0.57

Correlation Coefficient

Inflection Point  Roadzen

Very weak diversification

The 3 months correlation between Inflection and Roadzen is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and Roadzen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roadzen 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 Roadzen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roadzen has no effect on the direction of Inflection Point i.e., Inflection Point and Roadzen go up and down completely randomly.

Pair Corralation between Inflection Point and Roadzen

Assuming the 90 days horizon Inflection Point is expected to generate 10.57 times less return on investment than Roadzen. But when comparing it to its historical volatility, Inflection Point Acquisition is 6.65 times less risky than Roadzen. It trades about 0.09 of its potential returns per unit of risk. Roadzen is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Roadzen on October 24, 2024 and sell it today you would earn a total of  3.01  from holding Roadzen or generate 60.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	68.33%
Values	Daily Returns

Inflection Point Acquisition  vs.  Roadzen

Inflection Point Acq

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Inflection Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

Roadzen

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roadzen are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Roadzen showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inflection Point and Roadzen

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

The idea behind Inflection Point Acquisition and Roadzen 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.