Correlation Between Mobileye Global and Melar Acquisition

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

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

Diversification Opportunities for Mobileye Global and Melar Acquisition

-0.23

Correlation Coefficient

Mobileye Global  Melar Acquisition

Very good diversification

The 3 months correlation between Mobileye and Melar is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and Melar Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melar Acquisition Corp and Mobileye Global 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 Mobileye Global Class are associated (or correlated) with Melar Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melar Acquisition Corp has no effect on the direction of Mobileye Global i.e., Mobileye Global and Melar Acquisition go up and down completely randomly.

Pair Corralation between Mobileye Global and Melar Acquisition

Given the investment horizon of 90 days Mobileye Global Class is expected to under-perform the Melar Acquisition. In addition to that, Mobileye Global is 3.09 times more volatile than Melar Acquisition Corp. It trades about -0.08 of its total potential returns per unit of risk. Melar Acquisition Corp is currently generating about 0.02 per unit of volatility. If you would invest  1,012  in Melar Acquisition Corp on December 21, 2024 and sell it today you would earn a total of  7.00  from holding Melar Acquisition Corp or generate 0.69% return on investment over 90 days.

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

Mobileye Global Class  vs.  Melar Acquisition Corp

Mobileye Global Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mobileye Global Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Melar Acquisition Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Melar Acquisition Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Melar Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mobileye Global and Melar Acquisition

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

The idea behind Mobileye Global Class and Melar Acquisition Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.