Correlation Between Nauticus Robotics and LMF Acquisition

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

By analyzing existing cross correlation between Nauticus Robotics and LMF Acquisition Opportunities, you can compare the effects of market volatilities on Nauticus Robotics and LMF 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 Nauticus Robotics with a short position of LMF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nauticus Robotics and LMF Acquisition.

Diversification Opportunities for Nauticus Robotics and LMF Acquisition

0.17

Correlation Coefficient

Nauticus Robotics  LMF Acquisition

Average diversification

The 3 months correlation between Nauticus and LMF is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nauticus Robotics and LMF Acquisition Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LMF Acquisition Oppo and Nauticus Robotics 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 Nauticus Robotics are associated (or correlated) with LMF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LMF Acquisition Oppo has no effect on the direction of Nauticus Robotics i.e., Nauticus Robotics and LMF Acquisition go up and down completely randomly.

Pair Corralation between Nauticus Robotics and LMF Acquisition

Assuming the 90 days horizon Nauticus Robotics is expected to generate 3.44 times more return on investment than LMF Acquisition. However, Nauticus Robotics is 3.44 times more volatile than LMF Acquisition Opportunities. It trades about 0.18 of its potential returns per unit of risk. LMF Acquisition Opportunities is currently generating about 0.12 per unit of risk. If you would invest  1.78  in Nauticus Robotics on December 21, 2024 and sell it today you would earn a total of  6.53  from holding Nauticus Robotics or generate 366.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Nauticus Robotics  vs.  LMF Acquisition Opportunities

Nauticus Robotics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nauticus Robotics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nauticus Robotics showed solid returns over the last few months and may actually be approaching a breakup point.

LMF Acquisition Oppo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LMF Acquisition Opportunities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, LMF Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nauticus Robotics and LMF Acquisition

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

The idea behind Nauticus Robotics and LMF Acquisition Opportunities 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.