Correlation Between Park Electrochemical and FTAC Emerald

Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and FTAC Emerald 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 Park Electrochemical and FTAC Emerald into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Park Electrochemical and FTAC Emerald

0.74

Correlation Coefficient

Park Electrochemical  FTAC Emerald

Poor diversification

The 3 months correlation between Park and FTAC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and FTAC Emerald Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAC Emerald Acquisition and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with FTAC Emerald. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAC Emerald Acquisition has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and FTAC Emerald go up and down completely randomly.

Pair Corralation between Park Electrochemical and FTAC Emerald

Considering the 90-day investment horizon Park Electrochemical is expected to generate 1.33 times more return on investment than FTAC Emerald. However, Park Electrochemical is 1.33 times more volatile than FTAC Emerald Acquisition. It trades about 0.07 of its potential returns per unit of risk. FTAC Emerald Acquisition is currently generating about 0.05 per unit of risk. If you would invest  1,466  in Park Electrochemical on September 17, 2024 and sell it today you would earn a total of  26.00  from holding Park Electrochemical or generate 1.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Park Electrochemical  vs.  FTAC Emerald Acquisition

Park Electrochemical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Park Electrochemical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, Park Electrochemical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FTAC Emerald Acquisition

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FTAC Emerald Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, FTAC Emerald is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Park Electrochemical and FTAC Emerald

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

The idea behind Park Electrochemical and FTAC Emerald 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.