Correlation Between Clean Earth and Kairous Acquisition
Can any of the company-specific risk be diversified away by investing in both Clean Earth and Kairous 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 Clean Earth and Kairous Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Earth Acquisitions and Kairous Acquisition Corp, you can compare the effects of market volatilities on Clean Earth and Kairous 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 Clean Earth with a short position of Kairous Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Earth and Kairous Acquisition.
Diversification Opportunities for Clean Earth and Kairous Acquisition
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clean and Kairous is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Clean Earth Acquisitions and Kairous Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kairous Acquisition Corp and Clean Earth 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 Clean Earth Acquisitions are associated (or correlated) with Kairous Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kairous Acquisition Corp has no effect on the direction of Clean Earth i.e., Clean Earth and Kairous Acquisition go up and down completely randomly.
Pair Corralation between Clean Earth and Kairous Acquisition
Assuming the 90 days horizon Clean Earth is expected to generate 69.71 times less return on investment than Kairous Acquisition. But when comparing it to its historical volatility, Clean Earth Acquisitions is 19.09 times less risky than Kairous Acquisition. It trades about 0.04 of its potential returns per unit of risk. Kairous Acquisition Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Kairous Acquisition Corp on September 3, 2024 and sell it today you would lose (7.99) from holding Kairous Acquisition Corp or give up 53.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 61.79% |
| Values | Daily Returns |
Clean Earth Acquisitions vs. Kairous Acquisition Corp
Performance |
| Timeline |
| Clean Earth Acquisitions |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kairous Acquisition Corp |
Clean Earth and Kairous Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Earth and Kairous Acquisition
The main advantage of trading using opposite Clean Earth and Kairous Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Earth position performs unexpectedly, Kairous 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 Kairous Acquisition will offset losses from the drop in Kairous Acquisition's long position.The idea behind Clean Earth Acquisitions and Kairous 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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