Correlation Between RF Acquisition and Patria Latin
Can any of the company-specific risk be diversified away by investing in both RF Acquisition and Patria Latin 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 RF Acquisition and Patria Latin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RF Acquisition Corp and Patria Latin American, you can compare the effects of market volatilities on RF Acquisition and Patria Latin 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 RF Acquisition with a short position of Patria Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of RF Acquisition and Patria Latin.
Diversification Opportunities for RF Acquisition and Patria Latin
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RFACR and Patria is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding RF Acquisition Corp and Patria Latin American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Latin American and RF Acquisition 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 RF Acquisition Corp are associated (or correlated) with Patria Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Latin American has no effect on the direction of RF Acquisition i.e., RF Acquisition and Patria Latin go up and down completely randomly.
Pair Corralation between RF Acquisition and Patria Latin
Assuming the 90 days horizon RF Acquisition Corp is expected to generate 366.31 times more return on investment than Patria Latin. However, RF Acquisition is 366.31 times more volatile than Patria Latin American. It trades about 0.36 of its potential returns per unit of risk. Patria Latin American is currently generating about 0.03 per unit of risk. If you would invest 12.00 in RF Acquisition Corp on September 1, 2024 and sell it today you would lose (3.10) from holding RF Acquisition Corp or give up 25.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 34.71% |
| Values | Daily Returns |
RF Acquisition Corp vs. Patria Latin American
Performance |
| Timeline |
| RF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Patria Latin American |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
RF Acquisition and Patria Latin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RF Acquisition and Patria Latin
The main advantage of trading using opposite RF Acquisition and Patria Latin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RF Acquisition position performs unexpectedly, Patria Latin 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 Patria Latin will offset losses from the drop in Patria Latin's long position.| RF Acquisition vs. Hawkins | RF Acquisition vs. Zhihu Inc ADR | RF Acquisition vs. Mediag3 | RF Acquisition vs. Kaltura |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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