Correlation Between Perception Capital and ESGEN Acquisition

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

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

Diversification Opportunities for Perception Capital and ESGEN Acquisition

0.78

Correlation Coefficient

Perception Capital  ESGEN Acquisition

Poor diversification

The 3 months correlation between Perception and ESGEN is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Perception Capital Corp and ESGEN Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGEN Acquisition Corp and Perception Capital 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 Perception Capital Corp are associated (or correlated) with ESGEN Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGEN Acquisition Corp has no effect on the direction of Perception Capital i.e., Perception Capital and ESGEN Acquisition go up and down completely randomly.

Pair Corralation between Perception Capital and ESGEN Acquisition

If you would invest  1,101  in ESGEN Acquisition Corp on September 16, 2024 and sell it today you would earn a total of  0.00  from holding ESGEN Acquisition Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Perception Capital Corp  vs.  ESGEN Acquisition Corp

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 fairly stable basic indicators, Perception Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ESGEN Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Perception Capital and ESGEN Acquisition

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

The idea behind Perception Capital Corp and ESGEN 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.