Correlation Between LF Capital and Patria Latin

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

By analyzing existing cross correlation between LF Capital Acquisition and Patria Latin American, you can compare the effects of market volatilities on LF Capital and Patria Latin 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 LF Capital with a short position of Patria Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of LF Capital and Patria Latin.

Diversification Opportunities for LF Capital and Patria Latin

0.74

Correlation Coefficient

LF Capital  Patria Latin

Poor diversification

The 3 months correlation between LFAC and Patria is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding LF Capital Acquisition and Patria Latin American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Latin American and LF Capital 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 LF Capital Acquisition are associated (or correlated) with Patria Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Latin American has no effect on the direction of LF Capital i.e., LF Capital and Patria Latin go up and down completely randomly.

Pair Corralation between LF Capital and Patria Latin

If you would invest  1,163  in Patria Latin American on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Patria Latin American or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

LF Capital Acquisition  vs.  Patria Latin American

LF Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LF Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, LF Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Patria Latin American

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Latin American are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Patria Latin is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LF Capital and Patria Latin

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

The idea behind LF Capital Acquisition and Patria Latin American 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.