Correlation Between Mountain Lake and RF Acquisition

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

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

Diversification Opportunities for Mountain Lake and RF Acquisition

0.37

Correlation Coefficient

Mountain Lake  RF Acquisition

Weak diversification

The 3 months correlation between Mountain and RFAIR is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mountain Lake Acquisition and RF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Acquisition Corp and Mountain Lake 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 Lake Acquisition are associated (or correlated) with RF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Acquisition Corp has no effect on the direction of Mountain Lake i.e., Mountain Lake and RF Acquisition go up and down completely randomly.

Pair Corralation between Mountain Lake and RF Acquisition

Assuming the 90 days horizon Mountain Lake is expected to generate 20.08 times less return on investment than RF Acquisition. But when comparing it to its historical volatility, Mountain Lake Acquisition is 28.46 times less risky than RF Acquisition. It trades about 0.18 of its potential returns per unit of risk. RF Acquisition Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5.52  in RF Acquisition Corp on December 20, 2024 and sell it today you would earn a total of  1.48  from holding RF Acquisition Corp or generate 26.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.33%
Values	Daily Returns

Mountain Lake Acquisition  vs.  RF Acquisition Corp

Mountain Lake Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mountain Lake Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Mountain Lake is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

RF Acquisition Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RF Acquisition Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, RF Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mountain Lake and RF Acquisition

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

The idea behind Mountain Lake Acquisition and RF 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.