Correlation Between Rand Capital and ClimateRock

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

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

Diversification Opportunities for Rand Capital and ClimateRock

0.18

Correlation Coefficient

Rand Capital  ClimateRock

Average diversification

The 3 months correlation between Rand and ClimateRock is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and ClimateRock Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClimateRock Class and Rand 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 Rand Capital Corp are associated (or correlated) with ClimateRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClimateRock Class has no effect on the direction of Rand Capital i.e., Rand Capital and ClimateRock go up and down completely randomly.

Pair Corralation between Rand Capital and ClimateRock

Given the investment horizon of 90 days Rand Capital Corp is expected to generate 8.13 times more return on investment than ClimateRock. However, Rand Capital is 8.13 times more volatile than ClimateRock Class A. It trades about 0.02 of its potential returns per unit of risk. ClimateRock Class A is currently generating about 0.05 per unit of risk. If you would invest  1,925  in Rand Capital Corp on December 30, 2024 and sell it today you would lose (8.00) from holding Rand Capital Corp or give up 0.42% of portfolio value over 90 days.

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

Rand Capital Corp  vs.  ClimateRock Class A

Rand Capital Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ClimateRock Class

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ClimateRock Class A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ClimateRock is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Rand Capital and ClimateRock

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

The idea behind Rand Capital Corp and ClimateRock Class A 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.