Correlation Between YHN Acquisition and Cartica Acquisition

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

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

Diversification Opportunities for YHN Acquisition and Cartica Acquisition

0.21

Correlation Coefficient

YHN Acquisition  Cartica Acquisition

Modest diversification

The 3 months correlation between YHN and Cartica is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding YHN Acquisition I and Cartica Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartica Acquisition Corp and YHN 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 YHN Acquisition I are associated (or correlated) with Cartica Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartica Acquisition Corp has no effect on the direction of YHN Acquisition i.e., YHN Acquisition and Cartica Acquisition go up and down completely randomly.

Pair Corralation between YHN Acquisition and Cartica Acquisition

Assuming the 90 days horizon YHN Acquisition I is expected to generate 0.12 times more return on investment than Cartica Acquisition. However, YHN Acquisition I is 8.6 times less risky than Cartica Acquisition. It trades about 0.02 of its potential returns per unit of risk. Cartica Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest  1,013  in YHN Acquisition I on October 5, 2024 and sell it today you would earn a total of  2.00  from holding YHN Acquisition I or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

YHN Acquisition I  vs.  Cartica Acquisition Corp

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Cartica Acquisition Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Cartica Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal technical and fundamental indicators, Cartica Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YHN Acquisition and Cartica Acquisition

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

The idea behind YHN Acquisition I and Cartica Acquisition Corp 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..