Correlation Between Embrace Change and Cartesian Growth

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

By analyzing existing cross correlation between Embrace Change Acquisition and Cartesian Growth, you can compare the effects of market volatilities on Embrace Change and Cartesian Growth 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 Embrace Change with a short position of Cartesian Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Cartesian Growth.

Diversification Opportunities for Embrace Change and Cartesian Growth

0.76

Correlation Coefficient

Embrace Change  Cartesian Growth

Poor diversification

The 3 months correlation between Embrace and Cartesian is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Cartesian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartesian Growth and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Cartesian Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartesian Growth has no effect on the direction of Embrace Change i.e., Embrace Change and Cartesian Growth go up and down completely randomly.

Pair Corralation between Embrace Change and Cartesian Growth

Given the investment horizon of 90 days Embrace Change Acquisition is expected to generate 1.89 times more return on investment than Cartesian Growth. However, Embrace Change is 1.89 times more volatile than Cartesian Growth. It trades about 0.14 of its potential returns per unit of risk. Cartesian Growth is currently generating about 0.21 per unit of risk. If you would invest  1,154  in Embrace Change Acquisition on September 5, 2024 and sell it today you would earn a total of  30.00  from holding Embrace Change Acquisition or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Embrace Change Acquisition  vs.  Cartesian Growth

Embrace Change Acqui

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Embrace Change is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Cartesian Growth

Risk-Adjusted Performance

16 of 100

Solid

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

Pair Trading with Embrace Change and Cartesian Growth

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

The idea behind Embrace Change Acquisition and Cartesian Growth 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.