Correlation Between Armada Hflr and Latamgrowth SPAC

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Latamgrowth SPAC 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 Armada Hflr and Latamgrowth SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and Latamgrowth SPAC Unit, you can compare the effects of market volatilities on Armada Hflr and Latamgrowth SPAC 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 Armada Hflr with a short position of Latamgrowth SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Latamgrowth SPAC.

Diversification Opportunities for Armada Hflr and Latamgrowth SPAC

0.14

Correlation Coefficient

Armada Hflr  Latamgrowth SPAC

Average diversification

The 3 months correlation between Armada and Latamgrowth is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Latamgrowth SPAC Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latamgrowth SPAC Unit and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Latamgrowth SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latamgrowth SPAC Unit has no effect on the direction of Armada Hflr i.e., Armada Hflr and Latamgrowth SPAC go up and down completely randomly.

Pair Corralation between Armada Hflr and Latamgrowth SPAC

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Latamgrowth SPAC. In addition to that, Armada Hflr is 2.69 times more volatile than Latamgrowth SPAC Unit. It trades about -0.09 of its total potential returns per unit of risk. Latamgrowth SPAC Unit is currently generating about 0.25 per unit of volatility. If you would invest  1,163  in Latamgrowth SPAC Unit on September 17, 2024 and sell it today you would earn a total of  16.00  from holding Latamgrowth SPAC Unit or generate 1.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Armada Hflr Pr  vs.  Latamgrowth SPAC Unit

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Latamgrowth SPAC Unit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Latamgrowth SPAC Unit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Latamgrowth SPAC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Armada Hflr and Latamgrowth SPAC

The main advantage of trading using opposite Armada Hflr and Latamgrowth SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Latamgrowth SPAC 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 Latamgrowth SPAC will offset losses from the drop in Latamgrowth SPAC's long position.

The idea behind Armada Hflr Pr and Latamgrowth SPAC Unit 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.