Correlation Between Digital Health and CF Acquisition
Can any of the company-specific risk be diversified away by investing in both Digital Health and CF 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 Digital Health and CF Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Health Acquisition and CF Acquisition Corp, you can compare the effects of market volatilities on Digital Health and CF 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 Digital Health with a short position of CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Health and CF Acquisition.
Diversification Opportunities for Digital Health and CF Acquisition
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Digital and CFFE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Digital Health Acquisition and CF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition Corp and Digital Health 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 Digital Health Acquisition are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition Corp has no effect on the direction of Digital Health i.e., Digital Health and CF Acquisition go up and down completely randomly.
Pair Corralation between Digital Health and CF Acquisition
Given the investment horizon of 90 days Digital Health Acquisition is expected to generate 12.86 times more return on investment than CF Acquisition. However, Digital Health is 12.86 times more volatile than CF Acquisition Corp. It trades about 0.03 of its potential returns per unit of risk. CF Acquisition Corp is currently generating about 0.13 per unit of risk. If you would invest 1,052 in Digital Health Acquisition on August 26, 2024 and sell it today you would earn a total of 159.00 from holding Digital Health Acquisition or generate 15.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 40.77% |
| Values | Daily Returns |
Digital Health Acquisition vs. CF Acquisition Corp
Performance |
| Timeline |
| Digital Health Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Digital Health and CF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Health and CF Acquisition
The main advantage of trading using opposite Digital Health and CF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Health position performs unexpectedly, CF 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 CF Acquisition will offset losses from the drop in CF Acquisition's long position.| Digital Health vs. Insight Acquisition Corp | Digital Health vs. AlphaVest Acquisition Corp | Digital Health vs. Oak Woods Acquisition | Digital Health vs. Insight Acquisition Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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