Correlation Between Verde Clean and YHN Acquisition

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

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

Diversification Opportunities for Verde Clean and YHN Acquisition

-0.3

Correlation Coefficient

Verde Clean  YHN Acquisition

Very good diversification

The 3 months correlation between Verde and YHN is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Verde Clean Fuels and YHN Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YHN Acquisition I and Verde Clean 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 Verde Clean Fuels are associated (or correlated) with YHN Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YHN Acquisition I has no effect on the direction of Verde Clean i.e., Verde Clean and YHN Acquisition go up and down completely randomly.

Pair Corralation between Verde Clean and YHN Acquisition

Given the investment horizon of 90 days Verde Clean Fuels is expected to under-perform the YHN Acquisition. In addition to that, Verde Clean is 4.23 times more volatile than YHN Acquisition I. It trades about -0.01 of its total potential returns per unit of risk. YHN Acquisition I is currently generating about 0.02 per unit of volatility. If you would invest  1,009  in YHN Acquisition I on October 7, 2024 and sell it today you would earn a total of  6.00  from holding YHN Acquisition I or generate 0.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.24%
Values	Daily Returns

Verde Clean Fuels  vs.  YHN Acquisition I

Verde Clean Fuels

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Verde Clean Fuels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Verde Clean is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

YHN Acquisition I

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in YHN Acquisition I are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, YHN Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Verde Clean and YHN Acquisition

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

The idea behind Verde Clean Fuels and YHN Acquisition I 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.