Correlation Between L Catterton and Global Blockchain
Can any of the company-specific risk be diversified away by investing in both L Catterton and Global Blockchain 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 L Catterton and Global Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L Catterton Asia and Global Blockchain Acquisition, you can compare the effects of market volatilities on L Catterton and Global Blockchain 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 L Catterton with a short position of Global Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Catterton and Global Blockchain.
Diversification Opportunities for L Catterton and Global Blockchain
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LCAA and Global is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding L Catterton Asia and Global Blockchain Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Blockchain and L Catterton 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 L Catterton Asia are associated (or correlated) with Global Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Blockchain has no effect on the direction of L Catterton i.e., L Catterton and Global Blockchain go up and down completely randomly.
Pair Corralation between L Catterton and Global Blockchain
Given the investment horizon of 90 days L Catterton Asia is expected to generate 0.36 times more return on investment than Global Blockchain. However, L Catterton Asia is 2.8 times less risky than Global Blockchain. It trades about 0.14 of its potential returns per unit of risk. Global Blockchain Acquisition is currently generating about 0.04 per unit of risk. If you would invest 1,005 in L Catterton Asia on September 4, 2024 and sell it today you would earn a total of 45.00 from holding L Catterton Asia or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 30.77% |
| Values | Daily Returns |
L Catterton Asia vs. Global Blockchain Acquisition
Performance |
| Timeline |
| L Catterton Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Global Blockchain |
L Catterton and Global Blockchain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Catterton and Global Blockchain
The main advantage of trading using opposite L Catterton and Global Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Catterton position performs unexpectedly, Global Blockchain 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 Global Blockchain will offset losses from the drop in Global Blockchain's long position.The idea behind L Catterton Asia and Global Blockchain Acquisition 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.| Global Blockchain vs. Embrace Change Acquisition | Global Blockchain vs. Bannix Acquisition Corp | Global Blockchain vs. TransAKT | Global Blockchain vs. China Health Management |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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