Correlation Between TMT Acquisition and Ardelyx

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

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

Diversification Opportunities for TMT Acquisition and Ardelyx

0.42

Correlation Coefficient

TMT Acquisition  Ardelyx

Very weak diversification

The 3 months correlation between TMT and Ardelyx is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding TMT Acquisition Corp and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and TMT Acquisition 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 TMT Acquisition Corp are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of TMT Acquisition i.e., TMT Acquisition and Ardelyx go up and down completely randomly.

Pair Corralation between TMT Acquisition and Ardelyx

Assuming the 90 days horizon TMT Acquisition Corp is expected to under-perform the Ardelyx. But the stock apears to be less risky and, when comparing its historical volatility, TMT Acquisition Corp is 1.24 times less risky than Ardelyx. The stock trades about -0.05 of its potential returns per unit of risk. The Ardelyx is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  275.00  in Ardelyx on October 10, 2024 and sell it today you would earn a total of  266.00  from holding Ardelyx or generate 96.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.05%
Values	Daily Returns

TMT Acquisition Corp  vs.  Ardelyx

TMT Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMT Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ardelyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardelyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Ardelyx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TMT Acquisition and Ardelyx

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

The idea behind TMT Acquisition Corp and Ardelyx 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.