Correlation Between Beard Energy and Cactus Acquisition

Can any of the company-specific risk be diversified away by investing in both Beard Energy and Cactus Acquisition 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 Beard Energy and Cactus Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beard Energy Transition and Cactus Acquisition Corp, you can compare the effects of market volatilities on Beard Energy and Cactus Acquisition 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 Beard Energy with a short position of Cactus Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beard Energy and Cactus Acquisition.

Diversification Opportunities for Beard Energy and Cactus Acquisition

-0.14

Correlation Coefficient

Beard Energy  Cactus Acquisition

Good diversification

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

Pair Corralation between Beard Energy and Cactus Acquisition

If you would invest  1,116  in Cactus Acquisition Corp on September 16, 2024 and sell it today you would earn a total of  23.00  from holding Cactus Acquisition Corp or generate 2.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Beard Energy Transition  vs.  Cactus Acquisition Corp

Beard Energy Transition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beard Energy Transition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Beard Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cactus Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cactus Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cactus Acquisition 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 Beard Energy and Cactus Acquisition

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

The idea behind Beard Energy Transition and Cactus Acquisition Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.