Correlation Between Waldencast Acquisition and ADEIA P

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

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

Diversification Opportunities for Waldencast Acquisition and ADEIA P

-0.22

Correlation Coefficient

Waldencast Acquisition  ADEIA P

Very good diversification

The 3 months correlation between Waldencast and ADEIA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and ADEIA P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADEIA P and Waldencast 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 Waldencast Acquisition Corp are associated (or correlated) with ADEIA P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADEIA P has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and ADEIA P go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and ADEIA P

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to under-perform the ADEIA P. In addition to that, Waldencast Acquisition is 1.0 times more volatile than ADEIA P. It trades about -0.11 of its total potential returns per unit of risk. ADEIA P is currently generating about 0.0 per unit of volatility. If you would invest  1,380  in ADEIA P on December 30, 2024 and sell it today you would lose (55.00) from holding ADEIA P or give up 3.99% of portfolio value over 90 days.

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

Waldencast Acquisition Corp  vs.  ADEIA P

Waldencast Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waldencast 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 essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ADEIA P

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADEIA P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, ADEIA P is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Waldencast Acquisition and ADEIA P

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

The idea behind Waldencast Acquisition Corp and ADEIA P 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.