Correlation Between USCorp and Coastal Capital
Can any of the company-specific risk be diversified away by investing in both USCorp and Coastal Capital 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 USCorp and Coastal Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USCorp and Coastal Capital Acq, you can compare the effects of market volatilities on USCorp and Coastal Capital 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 USCorp with a short position of Coastal Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of USCorp and Coastal Capital.
Diversification Opportunities for USCorp and Coastal Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between USCorp and Coastal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding USCorp and Coastal Capital Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Capital Acq and USCorp 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 USCorp are associated (or correlated) with Coastal Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Capital Acq has no effect on the direction of USCorp i.e., USCorp and Coastal Capital go up and down completely randomly.
Pair Corralation between USCorp and Coastal Capital
Given the investment horizon of 90 days USCorp is expected to under-perform the Coastal Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, USCorp is 1.89 times less risky than Coastal Capital. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Coastal Capital Acq is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.13 in Coastal Capital Acq on September 6, 2024 and sell it today you would earn a total of 0.01 from holding Coastal Capital Acq or generate 7.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
USCorp vs. Coastal Capital Acq
Performance |
Timeline |
USCorp |
Coastal Capital Acq |
USCorp and Coastal Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with USCorp and Coastal Capital
The main advantage of trading using opposite USCorp and Coastal Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USCorp position performs unexpectedly, Coastal Capital 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 Coastal Capital will offset losses from the drop in Coastal Capital's long position.USCorp vs. New Generation Consumer | USCorp vs. A1 Group | USCorp vs. Foodfest Intl 2000 | USCorp vs. Simulated Environmen |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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