Correlation Between Waldencast Acquisition and AppYea

Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and AppYea 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 AppYea 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 AppYea Inc, you can compare the effects of market volatilities on Waldencast Acquisition and AppYea 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 AppYea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and AppYea.

Diversification Opportunities for Waldencast Acquisition and AppYea

0.39

Correlation Coefficient

Waldencast Acquisition  AppYea

Weak diversification

The 3 months correlation between Waldencast and AppYea is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and AppYea Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AppYea Inc 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 AppYea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AppYea Inc has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and AppYea go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and AppYea

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to under-perform the AppYea. But the stock apears to be less risky and, when comparing its historical volatility, Waldencast Acquisition Corp is 2.09 times less risky than AppYea. The stock trades about -0.04 of its potential returns per unit of risk. The AppYea Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.37  in AppYea Inc on August 31, 2024 and sell it today you would lose (0.52) from holding AppYea Inc or give up 21.94% of portfolio value over 90 days.

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

Waldencast Acquisition Corp  vs.  AppYea Inc

Waldencast Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Waldencast Acquisition exhibited solid returns over the last few months and may actually be approaching a breakup point.

AppYea Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AppYea Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, AppYea reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waldencast Acquisition and AppYea

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

The idea behind Waldencast Acquisition Corp and AppYea Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.