Correlation Between Clover Leaf and Belong Acquisition

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

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

Diversification Opportunities for Clover Leaf and Belong Acquisition

0.49

Correlation Coefficient

Clover Leaf  Belong Acquisition

Very weak diversification

The 3 months correlation between Clover and Belong is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Clover Leaf Capital and Belong Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belong Acquisition Corp and Clover Leaf 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 Clover Leaf Capital are associated (or correlated) with Belong Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belong Acquisition Corp has no effect on the direction of Clover Leaf i.e., Clover Leaf and Belong Acquisition go up and down completely randomly.

Pair Corralation between Clover Leaf and Belong Acquisition

Assuming the 90 days horizon Clover Leaf Capital is expected to generate 1.93 times more return on investment than Belong Acquisition. However, Clover Leaf is 1.93 times more volatile than Belong Acquisition Corp. It trades about 0.04 of its potential returns per unit of risk. Belong Acquisition Corp is currently generating about 0.02 per unit of risk. If you would invest  1,082  in Clover Leaf Capital on September 28, 2024 and sell it today you would earn a total of  347.00  from holding Clover Leaf Capital or generate 32.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	32.3%
Values	Daily Returns

Clover Leaf Capital  vs.  Belong Acquisition Corp

Clover Leaf Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clover Leaf Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Clover Leaf is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Belong Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Belong Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Belong Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Clover Leaf and Belong Acquisition

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

The idea behind Clover Leaf Capital and Belong 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.