Correlation Between OCA Acquisition and Inception Growth

Can any of the company-specific risk be diversified away by investing in both OCA Acquisition and Inception Growth 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 Inception Growth 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 Inception Growth Acquisition, you can compare the effects of market volatilities on OCA Acquisition and Inception Growth 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 Inception Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of OCA Acquisition and Inception Growth.

Diversification Opportunities for OCA Acquisition and Inception Growth

-0.53

Correlation Coefficient

OCA Acquisition  Inception Growth

Excellent diversification

The 3 months correlation between OCA and Inception is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding OCA Acquisition Corp and Inception Growth Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inception Growth Acq 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 Inception Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inception Growth Acq has no effect on the direction of OCA Acquisition i.e., OCA Acquisition and Inception Growth go up and down completely randomly.

Pair Corralation between OCA Acquisition and Inception Growth

Assuming the 90 days horizon OCA Acquisition is expected to generate 1010.69 times less return on investment than Inception Growth. But when comparing it to its historical volatility, OCA Acquisition Corp is 74.45 times less risky than Inception Growth. It trades about 0.01 of its potential returns per unit of risk. Inception Growth Acquisition is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Inception Growth Acquisition on October 6, 2024 and sell it today you would lose (14.00) from holding Inception Growth Acquisition or give up 73.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

OCA Acquisition Corp  vs.  Inception Growth Acquisition

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 comparatively stable basic indicators, OCA Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Inception Growth Acq

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Inception Growth Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Inception Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OCA Acquisition and Inception Growth

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

The idea behind OCA Acquisition Corp and Inception Growth Acquisition 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.