Correlation Between Metalpha Technology and Embrace Change

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

By analyzing existing cross correlation between Metalpha Technology Holding and Embrace Change Acquisition, you can compare the effects of market volatilities on Metalpha Technology and Embrace Change 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 Metalpha Technology with a short position of Embrace Change. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalpha Technology and Embrace Change.

Diversification Opportunities for Metalpha Technology and Embrace Change

0.77

Correlation Coefficient

Metalpha Technology  Embrace Change

Poor diversification

The 3 months correlation between Metalpha and Embrace is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Metalpha Technology Holding and Embrace Change Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embrace Change Acqui and Metalpha Technology 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 Metalpha Technology Holding are associated (or correlated) with Embrace Change. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embrace Change Acqui has no effect on the direction of Metalpha Technology i.e., Metalpha Technology and Embrace Change go up and down completely randomly.

Pair Corralation between Metalpha Technology and Embrace Change

Given the investment horizon of 90 days Metalpha Technology Holding is expected to generate 15.6 times more return on investment than Embrace Change. However, Metalpha Technology is 15.6 times more volatile than Embrace Change Acquisition. It trades about 0.16 of its potential returns per unit of risk. Embrace Change Acquisition is currently generating about 0.09 per unit of risk. If you would invest  90.00  in Metalpha Technology Holding on November 29, 2024 and sell it today you would earn a total of  65.00  from holding Metalpha Technology Holding or generate 72.22% return on investment over 90 days.

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

Metalpha Technology Holding  vs.  Embrace Change Acquisition

Metalpha Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metalpha Technology Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Metalpha Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Embrace Change Acqui

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Embrace Change is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Metalpha Technology and Embrace Change

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

The idea behind Metalpha Technology Holding and Embrace Change Acquisition 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.