Correlation Between OCA Acquisition and Thunder Bridge

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

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

Diversification Opportunities for OCA Acquisition and Thunder Bridge

0.37

Correlation Coefficient

OCA Acquisition  Thunder Bridge

Weak diversification

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

Pair Corralation between OCA Acquisition and Thunder Bridge

If you would invest  1,110  in Thunder Bridge Capital on September 18, 2024 and sell it today you would earn a total of  114.00  from holding Thunder Bridge Capital or generate 10.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.88%
Values	Daily Returns

OCA Acquisition Corp  vs.  Thunder Bridge Capital

OCA Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCA Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, OCA Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thunder Bridge Capital

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with OCA Acquisition and Thunder Bridge

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

The idea behind OCA Acquisition Corp and Thunder Bridge Capital 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.