Correlation Between Mountain Crest and Pyxis Tankers

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

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

Diversification Opportunities for Mountain Crest and Pyxis Tankers

-0.34

Correlation Coefficient

Mountain Crest  Pyxis Tankers

Very good diversification

The 3 months correlation between Mountain and Pyxis is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mountain Crest Acquisition and Pyxis Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyxis Tankers and Mountain Crest 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 Mountain Crest Acquisition are associated (or correlated) with Pyxis Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyxis Tankers has no effect on the direction of Mountain Crest i.e., Mountain Crest and Pyxis Tankers go up and down completely randomly.

Pair Corralation between Mountain Crest and Pyxis Tankers

Assuming the 90 days horizon Mountain Crest Acquisition is expected to under-perform the Pyxis Tankers. In addition to that, Mountain Crest is 13.68 times more volatile than Pyxis Tankers. It trades about -0.19 of its total potential returns per unit of risk. Pyxis Tankers is currently generating about 0.04 per unit of volatility. If you would invest  2,094  in Pyxis Tankers on September 24, 2024 and sell it today you would earn a total of  403.00  from holding Pyxis Tankers or generate 19.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	7.86%
Values	Daily Returns

Mountain Crest Acquisition  vs.  Pyxis Tankers

Mountain Crest Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain Crest Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Mountain Crest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pyxis Tankers

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Pyxis Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Pyxis Tankers is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Mountain Crest and Pyxis Tankers

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

The idea behind Mountain Crest Acquisition and Pyxis Tankers 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.