Correlation Between Newcourt Acquisition and Perception Capital

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

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

Diversification Opportunities for Newcourt Acquisition and Perception Capital

0.0

Correlation Coefficient

Newcourt Acquisition  Perception Capital

Pay attention - limited upside

The 3 months correlation between Newcourt and Perception is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Newcourt Acquisition Corp and Perception Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perception Capital Corp and Newcourt 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 Newcourt Acquisition Corp are associated (or correlated) with Perception Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perception Capital Corp has no effect on the direction of Newcourt Acquisition i.e., Newcourt Acquisition and Perception Capital go up and down completely randomly.

Pair Corralation between Newcourt Acquisition and Perception Capital

Assuming the 90 days horizon Newcourt Acquisition Corp is expected to generate 1.31 times more return on investment than Perception Capital. However, Newcourt Acquisition is 1.31 times more volatile than Perception Capital Corp. It trades about 0.11 of its potential returns per unit of risk. Perception Capital Corp is currently generating about 0.13 per unit of risk. If you would invest  1,057  in Newcourt Acquisition Corp on October 26, 2024 and sell it today you would earn a total of  44.00  from holding Newcourt Acquisition Corp or generate 4.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Newcourt Acquisition Corp  vs.  Perception Capital Corp

Newcourt Acquisition Corp

Risk-Adjusted Performance

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Very Weak

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

Perception Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perception Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Perception Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Newcourt Acquisition and Perception Capital

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

The idea behind Newcourt Acquisition Corp and Perception Capital 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.