Correlation Between Melar Acquisition and Carlyle

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

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

Diversification Opportunities for Melar Acquisition and Carlyle

0.56

Correlation Coefficient

Melar Acquisition  Carlyle

Very weak diversification

The 3 months correlation between Melar and Carlyle is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Melar Acquisition Corp and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and Melar Acquisition 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 Melar Acquisition Corp are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Melar Acquisition i.e., Melar Acquisition and Carlyle go up and down completely randomly.

Pair Corralation between Melar Acquisition and Carlyle

Given the investment horizon of 90 days Melar Acquisition is expected to generate 19.95 times less return on investment than Carlyle. But when comparing it to its historical volatility, Melar Acquisition Corp is 10.26 times less risky than Carlyle. It trades about 0.04 of its potential returns per unit of risk. Carlyle Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,180  in Carlyle Group on September 21, 2024 and sell it today you would earn a total of  1,723  from holding Carlyle Group or generate 54.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	40.89%
Values	Daily Returns

Melar Acquisition Corp  vs.  Carlyle Group

Melar Acquisition Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Melar Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Melar Acquisition is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Carlyle Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Melar Acquisition and Carlyle

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

The idea behind Melar Acquisition Corp and Carlyle Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.