Correlation Between Embrace Change and APx Acquisition
Can any of the company-specific risk be diversified away by investing in both Embrace Change and APx 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 Embrace Change and APx Acquisition 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 APx Acquisition Corp, you can compare the effects of market volatilities on Embrace Change and APx 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 Embrace Change with a short position of APx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and APx Acquisition.
Diversification Opportunities for Embrace Change and APx Acquisition
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Embrace and APx is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and APx Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APx Acquisition Corp 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 APx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APx Acquisition Corp has no effect on the direction of Embrace Change i.e., Embrace Change and APx Acquisition go up and down completely randomly.
Pair Corralation between Embrace Change and APx Acquisition
Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 1.2 times more return on investment than APx Acquisition. However, Embrace Change is 1.2 times more volatile than APx Acquisition Corp. It trades about 0.03 of its potential returns per unit of risk. APx Acquisition Corp is currently generating about 0.03 per unit of risk. If you would invest 1,115 in Embrace Change Acquisition on September 1, 2024 and sell it today you would earn a total of 50.00 from holding Embrace Change Acquisition or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.62% |
| Values | Daily Returns |
Embrace Change Acquisition vs. APx Acquisition Corp
Performance |
| Timeline |
| Embrace Change Acqui |
| APx Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Embrace Change and APx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and APx Acquisition
The main advantage of trading using opposite Embrace Change and APx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, APx 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 APx Acquisition will offset losses from the drop in APx Acquisition's long position.The idea behind Embrace Change Acquisition and APx 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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