Correlation Between Patria Latin and ClimateRock
Can any of the company-specific risk be diversified away by investing in both Patria Latin and ClimateRock 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 Patria Latin and ClimateRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patria Latin American and ClimateRock Class A, you can compare the effects of market volatilities on Patria Latin and ClimateRock 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 Patria Latin with a short position of ClimateRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patria Latin and ClimateRock.
Diversification Opportunities for Patria Latin and ClimateRock
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Patria and ClimateRock is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Patria Latin American and ClimateRock Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClimateRock Class and Patria Latin 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 Patria Latin American are associated (or correlated) with ClimateRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClimateRock Class has no effect on the direction of Patria Latin i.e., Patria Latin and ClimateRock go up and down completely randomly.
Pair Corralation between Patria Latin and ClimateRock
Assuming the 90 days horizon Patria Latin American is expected to generate 5.48 times more return on investment than ClimateRock. However, Patria Latin is 5.48 times more volatile than ClimateRock Class A. It trades about 0.03 of its potential returns per unit of risk. ClimateRock Class A is currently generating about 0.14 per unit of risk. If you would invest 1,120 in Patria Latin American on September 1, 2024 and sell it today you would earn a total of 42.00 from holding Patria Latin American or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.34% |
| Values | Daily Returns |
Patria Latin American vs. ClimateRock Class A
Performance |
| Timeline |
| Patria Latin American |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| ClimateRock Class |
Patria Latin and ClimateRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patria Latin and ClimateRock
The main advantage of trading using opposite Patria Latin and ClimateRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patria Latin position performs unexpectedly, ClimateRock 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 ClimateRock will offset losses from the drop in ClimateRock's long position.The idea behind Patria Latin American and ClimateRock Class A 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.| ClimateRock vs. AlphaVest Acquisition Corp | ClimateRock vs. Golden Star Acquisition | ClimateRock vs. Alpha One | ClimateRock vs. Manaris Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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