Correlation Between Inflection Point and New Horizon

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

By analyzing existing cross correlation between Inflection Point Acquisition and New Horizon Aircraft, you can compare the effects of market volatilities on Inflection Point and New Horizon 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 Inflection Point with a short position of New Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflection Point and New Horizon.

Diversification Opportunities for Inflection Point and New Horizon

-0.44

Correlation Coefficient

Inflection Point  New Horizon

Very good diversification

The 3 months correlation between Inflection and New is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft and Inflection Point 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 Inflection Point Acquisition are associated (or correlated) with New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Inflection Point i.e., Inflection Point and New Horizon go up and down completely randomly.

Pair Corralation between Inflection Point and New Horizon

Assuming the 90 days horizon Inflection Point is expected to generate 14.94 times less return on investment than New Horizon. But when comparing it to its historical volatility, Inflection Point Acquisition is 68.28 times less risky than New Horizon. It trades about 0.2 of its potential returns per unit of risk. New Horizon Aircraft is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  92.00  in New Horizon Aircraft on September 5, 2024 and sell it today you would lose (11.00) from holding New Horizon Aircraft or give up 11.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Inflection Point Acquisition  vs.  New Horizon Aircraft

Inflection Point Acq

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Inflection Point is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

New Horizon Aircraft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Horizon Aircraft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, New Horizon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inflection Point and New Horizon

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

The idea behind Inflection Point Acquisition and New Horizon Aircraft 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.