Correlation Between Waldencast Acquisition and 01 Communique

Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and 01 Communique 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 01 Communique 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 01 Communique Laboratory, you can compare the effects of market volatilities on Waldencast Acquisition and 01 Communique 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 01 Communique. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and 01 Communique.

Diversification Opportunities for Waldencast Acquisition and 01 Communique

0.11

Correlation Coefficient

Waldencast Acquisition  01 Communique

Average diversification

The 3 months correlation between Waldencast and OONEF is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and 01 Communique Laboratory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 01 Communique Laboratory 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 01 Communique. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 01 Communique Laboratory has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and 01 Communique go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and 01 Communique

Assuming the 90 days horizon Waldencast Acquisition Corp is expected to generate 0.99 times more return on investment than 01 Communique. However, Waldencast Acquisition Corp is 1.01 times less risky than 01 Communique. It trades about 0.04 of its potential returns per unit of risk. 01 Communique Laboratory is currently generating about -0.08 per unit of risk. If you would invest  17.00  in Waldencast Acquisition Corp on December 30, 2024 and sell it today you would lose (1.00) from holding Waldencast Acquisition Corp or give up 5.88% of portfolio value over 90 days.

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

Waldencast Acquisition Corp  vs.  01 Communique Laboratory

Waldencast Acquisition

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Waldencast Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

01 Communique Laboratory

Risk-Adjusted Performance

Very Weak

Over the last 90 days 01 Communique Laboratory has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Waldencast Acquisition and 01 Communique

The main advantage of trading using opposite Waldencast Acquisition and 01 Communique positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waldencast Acquisition position performs unexpectedly, 01 Communique 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 01 Communique will offset losses from the drop in 01 Communique's long position.

The idea behind Waldencast Acquisition Corp and 01 Communique Laboratory 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.