Correlation Between Semper Paratus and Focus Impact
Can any of the company-specific risk be diversified away by investing in both Semper Paratus and Focus Impact 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 Semper Paratus and Focus Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semper Paratus Acquisition and Focus Impact Acquisition, you can compare the effects of market volatilities on Semper Paratus and Focus Impact 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 Semper Paratus with a short position of Focus Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semper Paratus and Focus Impact.
Diversification Opportunities for Semper Paratus and Focus Impact
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Semper and Focus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Semper Paratus Acquisition and Focus Impact Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Impact Acquisition and Semper Paratus 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 Semper Paratus Acquisition are associated (or correlated) with Focus Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Impact Acquisition has no effect on the direction of Semper Paratus i.e., Semper Paratus and Focus Impact go up and down completely randomly.
Pair Corralation between Semper Paratus and Focus Impact
Assuming the 90 days horizon Semper Paratus is expected to generate 1.96 times less return on investment than Focus Impact. But when comparing it to its historical volatility, Semper Paratus Acquisition is 2.37 times less risky than Focus Impact. It trades about 0.15 of its potential returns per unit of risk. Focus Impact Acquisition is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Focus Impact Acquisition on August 30, 2024 and sell it today you would lose (4.00) from holding Focus Impact Acquisition or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 52.63% |
| Values | Daily Returns |
Semper Paratus Acquisition vs. Focus Impact Acquisition
Performance |
| Timeline |
| Semper Paratus Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Focus Impact Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Semper Paratus and Focus Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semper Paratus and Focus Impact
The main advantage of trading using opposite Semper Paratus and Focus Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semper Paratus position performs unexpectedly, Focus Impact 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 Focus Impact will offset losses from the drop in Focus Impact's long position.The idea behind Semper Paratus Acquisition and Focus Impact 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.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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