Correlation Between Embrace Change and Continental Beverage
Can any of the company-specific risk be diversified away by investing in both Embrace Change and Continental Beverage 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 Embrace Change and Continental Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embrace Change Acquisition and Continental Beverage Brands, you can compare the effects of market volatilities on Embrace Change and Continental Beverage 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 Embrace Change with a short position of Continental Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Continental Beverage.
Diversification Opportunities for Embrace Change and Continental Beverage
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Embrace and Continental is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Continental Beverage Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Beverage and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Continental Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Beverage has no effect on the direction of Embrace Change i.e., Embrace Change and Continental Beverage go up and down completely randomly.
Pair Corralation between Embrace Change and Continental Beverage
Given the investment horizon of 90 days Embrace Change is expected to generate 871.89 times less return on investment than Continental Beverage. But when comparing it to its historical volatility, Embrace Change Acquisition is 383.05 times less risky than Continental Beverage. It trades about 0.09 of its potential returns per unit of risk. Continental Beverage Brands is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Continental Beverage Brands on September 2, 2024 and sell it today you would earn a total of 55.00 from holding Continental Beverage Brands or generate 275.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embrace Change Acquisition vs. Continental Beverage Brands
Performance |
| Timeline |
| Embrace Change Acqui |
| Continental Beverage |
Embrace Change and Continental Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and Continental Beverage
The main advantage of trading using opposite Embrace Change and Continental Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, Continental Beverage 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 Continental Beverage will offset losses from the drop in Continental Beverage's long position.| Embrace Change vs. China Health Management | Embrace Change vs. Absolute Health and | Embrace Change vs. Supurva Healthcare Group | Embrace Change vs. TransAKT |
| Continental Beverage vs. American Leisure Holdings | Continental Beverage vs. Supurva Healthcare Group | Continental Beverage vs. China Health Management | Continental Beverage vs. Embrace Change Acquisition |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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