Correlation Between ClimateRock and Focus Impact

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

By analyzing existing cross correlation between ClimateRock Class A and Focus Impact Acquisition, you can compare the effects of market volatilities on ClimateRock and Focus Impact 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 ClimateRock with a short position of Focus Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClimateRock and Focus Impact.

Diversification Opportunities for ClimateRock and Focus Impact

-0.79

Correlation Coefficient

ClimateRock  Focus Impact

Pay attention - limited upside

The 3 months correlation between ClimateRock and Focus is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ClimateRock Class A and Focus Impact Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Impact Acquisition and ClimateRock 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 ClimateRock Class A are associated (or correlated) with Focus Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Impact Acquisition has no effect on the direction of ClimateRock i.e., ClimateRock and Focus Impact go up and down completely randomly.

Pair Corralation between ClimateRock and Focus Impact

Given the investment horizon of 90 days ClimateRock Class A is expected to generate 0.01 times more return on investment than Focus Impact. However, ClimateRock Class A is 182.0 times less risky than Focus Impact. It trades about 0.21 of its potential returns per unit of risk. Focus Impact Acquisition is currently generating about -0.06 per unit of risk. If you would invest  1,155  in ClimateRock Class A on September 13, 2024 and sell it today you would earn a total of  20.00  from holding ClimateRock Class A or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.08%
Values	Daily Returns

ClimateRock Class A  vs.  Focus Impact Acquisition

ClimateRock Class

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ClimateRock Class A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ClimateRock is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Focus Impact Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focus Impact Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with ClimateRock and Focus Impact

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

The idea behind ClimateRock Class A and Focus Impact Acquisition 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 Anywhere module to track or share privately all of your investments from the convenience of any device.