Correlation Between Patria Latin and Target Global

Can any of the company-specific risk be diversified away by investing in both Patria Latin and Target Global 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 Patria Latin and Target Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Patria Latin American and Target Global Acquisition, you can compare the effects of market volatilities on Patria Latin and Target Global 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 Patria Latin with a short position of Target Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patria Latin and Target Global.

Diversification Opportunities for Patria Latin and Target Global

0.47

Correlation Coefficient

Patria Latin  Target Global

Very weak diversification

The 3 months correlation between Patria and Target is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Patria Latin American and Target Global Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Global Acquisition and Patria Latin 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 Patria Latin American are associated (or correlated) with Target Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Global Acquisition has no effect on the direction of Patria Latin i.e., Patria Latin and Target Global go up and down completely randomly.

Pair Corralation between Patria Latin and Target Global

Assuming the 90 days horizon Patria Latin American is expected to generate 2.83 times more return on investment than Target Global. However, Patria Latin is 2.83 times more volatile than Target Global Acquisition. It trades about 0.03 of its potential returns per unit of risk. Target Global Acquisition is currently generating about 0.07 per unit of risk. If you would invest  1,034  in Patria Latin American on September 14, 2024 and sell it today you would earn a total of  128.00  from holding Patria Latin American or generate 12.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.17%
Values	Daily Returns

Patria Latin American  vs.  Target Global Acquisition

Patria Latin American

Risk-Adjusted Performance

0 of 100

Weak

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

Target Global Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Target Global Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Target Global is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Patria Latin and Target Global

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

The idea behind Patria Latin American and Target Global 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.