Correlation Between Embrace Change and Oak Woods
Can any of the company-specific risk be diversified away by investing in both Embrace Change and Oak Woods 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 Oak Woods 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 Oak Woods Acquisition, you can compare the effects of market volatilities on Embrace Change and Oak Woods 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 Oak Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Oak Woods.
Diversification Opportunities for Embrace Change and Oak Woods
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Embrace and Oak is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Oak Woods Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Woods Acquisition 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 Oak Woods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Woods Acquisition has no effect on the direction of Embrace Change i.e., Embrace Change and Oak Woods go up and down completely randomly.
Pair Corralation between Embrace Change and Oak Woods
Given the investment horizon of 90 days Embrace Change is expected to generate 1.42 times less return on investment than Oak Woods. But when comparing it to its historical volatility, Embrace Change Acquisition is 5.16 times less risky than Oak Woods. It trades about 0.14 of its potential returns per unit of risk. Oak Woods Acquisition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,100 in Oak Woods Acquisition on September 1, 2024 and sell it today you would earn a total of 50.00 from holding Oak Woods Acquisition or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embrace Change Acquisition vs. Oak Woods Acquisition
Performance |
| Timeline |
| Embrace Change Acqui |
| Oak Woods Acquisition |
Embrace Change and Oak Woods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and Oak Woods
The main advantage of trading using opposite Embrace Change and Oak Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, Oak Woods 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 Oak Woods will offset losses from the drop in Oak Woods' long position.| Embrace Change vs. China Health Management | Embrace Change vs. Absolute Health and | Embrace Change vs. Supurva Healthcare Group | Embrace Change vs. TransAKT |
| Oak Woods vs. Avient Corp | Oak Woods vs. Minerals Technologies | Oak Woods vs. Eldorado Gold Corp | Oak Woods vs. Evolution Gaming Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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