Correlation Between ClimateRock and Kingswood Acquisition

Can any of the company-specific risk be diversified away by investing in both ClimateRock and Kingswood 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 ClimateRock and Kingswood Acquisition 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 Kingswood Acquisition Corp, you can compare the effects of market volatilities on ClimateRock and Kingswood 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 ClimateRock with a short position of Kingswood Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClimateRock and Kingswood Acquisition.

Diversification Opportunities for ClimateRock and Kingswood Acquisition

-0.12

Correlation Coefficient

ClimateRock  Kingswood Acquisition

Good diversification

The 3 months correlation between ClimateRock and Kingswood is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ClimateRock Class A and Kingswood Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingswood 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 Kingswood Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingswood Acquisition has no effect on the direction of ClimateRock i.e., ClimateRock and Kingswood Acquisition go up and down completely randomly.

Pair Corralation between ClimateRock and Kingswood Acquisition

If you would invest  1,155  in ClimateRock Class A on September 3, 2024 and sell it today you would earn a total of  10.00  from holding ClimateRock Class A or generate 0.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

ClimateRock Class A  vs.  Kingswood Acquisition Corp

ClimateRock Class

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ClimateRock Class A are ranked lower than 15 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Kingswood Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ClimateRock and Kingswood Acquisition

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

The idea behind ClimateRock Class A and Kingswood 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.