Correlation Between African Gold and Pontem Corp
Can any of the company-specific risk be diversified away by investing in both African Gold and Pontem Corp 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 African Gold and Pontem Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Gold Acquisition and Pontem Corp, you can compare the effects of market volatilities on African Gold and Pontem Corp 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 African Gold with a short position of Pontem Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Gold and Pontem Corp.
Diversification Opportunities for African Gold and Pontem Corp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between African and Pontem is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding African Gold Acquisition and Pontem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontem Corp and African Gold 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 African Gold Acquisition are associated (or correlated) with Pontem Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontem Corp has no effect on the direction of African Gold i.e., African Gold and Pontem Corp go up and down completely randomly.
Pair Corralation between African Gold and Pontem Corp
If you would invest 1,037 in Pontem Corp on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Pontem Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
African Gold Acquisition vs. Pontem Corp
Performance |
| Timeline |
| African Gold Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pontem Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
African Gold and Pontem Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Gold and Pontem Corp
The main advantage of trading using opposite African Gold and Pontem Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Gold position performs unexpectedly, Pontem Corp 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 Pontem Corp will offset losses from the drop in Pontem Corp's long position.The idea behind African Gold Acquisition and Pontem 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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