Correlation Between Cartica Acquisition and A SPAC
Can any of the company-specific risk be diversified away by investing in both Cartica Acquisition and A SPAC 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 Cartica Acquisition and A SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cartica Acquisition Corp and A SPAC I, you can compare the effects of market volatilities on Cartica Acquisition and A SPAC 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 Cartica Acquisition with a short position of A SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cartica Acquisition and A SPAC.
Diversification Opportunities for Cartica Acquisition and A SPAC
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cartica and ASCAU is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cartica Acquisition Corp and A SPAC I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A SPAC I and Cartica 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 Cartica Acquisition Corp are associated (or correlated) with A SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A SPAC I has no effect on the direction of Cartica Acquisition i.e., Cartica Acquisition and A SPAC go up and down completely randomly.
Pair Corralation between Cartica Acquisition and A SPAC
Assuming the 90 days horizon Cartica Acquisition Corp is expected to generate 0.75 times more return on investment than A SPAC. However, Cartica Acquisition Corp is 1.34 times less risky than A SPAC. It trades about 0.03 of its potential returns per unit of risk. A SPAC I is currently generating about -0.03 per unit of risk. If you would invest 1,055 in Cartica Acquisition Corp on August 30, 2024 and sell it today you would earn a total of 88.00 from holding Cartica Acquisition Corp or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 13.45% |
| Values | Daily Returns |
Cartica Acquisition Corp vs. A SPAC I
Performance |
| Timeline |
| Cartica Acquisition Corp |
| A SPAC I |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cartica Acquisition and A SPAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cartica Acquisition and A SPAC
The main advantage of trading using opposite Cartica Acquisition and A SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cartica Acquisition position performs unexpectedly, A SPAC 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 A SPAC will offset losses from the drop in A SPAC's long position.The idea behind Cartica Acquisition Corp and A SPAC I 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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