Correlation Between Embrace Change and Mountain I

Can any of the company-specific risk be diversified away by investing in both Embrace Change and Mountain I 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 Mountain I 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 Mountain I Acquisition, you can compare the effects of market volatilities on Embrace Change and Mountain I 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 Mountain I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Mountain I.

Diversification Opportunities for Embrace Change and Mountain I

-0.32

Correlation Coefficient

Embrace Change  Mountain I

Very good diversification

The 3 months correlation between Embrace and Mountain is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Mountain I Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain I Acquisition 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 Mountain I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain I Acquisition has no effect on the direction of Embrace Change i.e., Embrace Change and Mountain I go up and down completely randomly.

Pair Corralation between Embrace Change and Mountain I

Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 281.69 times more return on investment than Mountain I. However, Embrace Change is 281.69 times more volatile than Mountain I Acquisition. It trades about 0.06 of its potential returns per unit of risk. Mountain I Acquisition is currently generating about 0.16 per unit of risk. If you would invest  13.00  in Embrace Change Acquisition on September 17, 2024 and sell it today you would lose (0.80) from holding Embrace Change Acquisition or give up 6.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	36.59%
Values	Daily Returns

Embrace Change Acquisition  vs.  Mountain I Acquisition

Embrace Change Acqui

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Embrace Change Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively abnormal technical and fundamental indicators, Embrace Change reported solid returns over the last few months and may actually be approaching a breakup point.

Mountain I Acquisition

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Mountain I Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mountain I 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 Embrace Change and Mountain I

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

The idea behind Embrace Change Acquisition and Mountain I 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.