Correlation Between Embrace Change and Coastal Capital
Can any of the company-specific risk be diversified away by investing in both Embrace Change and Coastal Capital 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 Coastal Capital 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 Coastal Capital Acq, you can compare the effects of market volatilities on Embrace Change and Coastal Capital 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 Coastal Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Coastal Capital.
Diversification Opportunities for Embrace Change and Coastal Capital
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Embrace and Coastal is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Coastal Capital Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Capital Acq 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 Coastal Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Capital Acq has no effect on the direction of Embrace Change i.e., Embrace Change and Coastal Capital go up and down completely randomly.
Pair Corralation between Embrace Change and Coastal Capital
Given the investment horizon of 90 days Embrace Change is expected to generate 82.59 times less return on investment than Coastal Capital. But when comparing it to its historical volatility, Embrace Change Acquisition is 135.91 times less risky than Coastal Capital. It trades about 0.16 of its potential returns per unit of risk. Coastal Capital Acq is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.14 in Coastal Capital Acq on August 31, 2024 and sell it today you would lose (0.06) from holding Coastal Capital Acq or give up 42.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Embrace Change Acquisition vs. Coastal Capital Acq
Performance |
| Timeline |
| Embrace Change Acqui |
| Coastal Capital Acq |
Embrace Change and Coastal Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and Coastal Capital
The main advantage of trading using opposite Embrace Change and Coastal Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, Coastal Capital 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 Coastal Capital will offset losses from the drop in Coastal Capital'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 |
| Coastal Capital vs. American Leisure Holdings | Coastal Capital vs. Supurva Healthcare Group | Coastal Capital vs. China Health Management | Coastal Capital 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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