Correlation Between Pono Capital and Patria Latin

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

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

Diversification Opportunities for Pono Capital and Patria Latin

0.0

Correlation Coefficient

Pono Capital  Patria Latin

Pay attention - limited upside

The 3 months correlation between Pono and Patria is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pono Capital Two and Patria Latin American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Latin American and Pono 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 Pono Capital Two are associated (or correlated) with Patria Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Latin American has no effect on the direction of Pono Capital i.e., Pono Capital and Patria Latin go up and down completely randomly.

Pair Corralation between Pono Capital and Patria Latin

If you would invest (100.00) in Patria Latin American on December 4, 2024 and sell it today you would earn a total of  100.00  from holding Patria Latin American or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pono Capital Two  vs.  Patria Latin American

Pono Capital Two

Risk-Adjusted Performance

Very Weak

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

Patria Latin American

Risk-Adjusted Performance

Very 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.

Pair Trading with Pono Capital and Patria Latin

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

The idea behind Pono Capital Two and Patria Latin American 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.