Correlation Between Inflection Point and WT Offshore

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

Diversification Opportunities for Inflection Point and WT Offshore

-0.01

Correlation Coefficient

Inflection Point  WT Offshore

Good diversification

The 3 months correlation between Inflection and WTI is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore 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 WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of Inflection Point i.e., Inflection Point and WT Offshore go up and down completely randomly.

Pair Corralation between Inflection Point and WT Offshore

Assuming the 90 days horizon Inflection Point Acquisition is expected to generate 0.05 times more return on investment than WT Offshore. However, Inflection Point Acquisition is 22.2 times less risky than WT Offshore. It trades about 0.2 of its potential returns per unit of risk. WT Offshore is currently generating about -0.01 per unit of risk. If you would invest  1,075  in Inflection Point Acquisition on September 3, 2024 and sell it today you would earn a total of  25.00  from holding Inflection Point Acquisition or generate 2.33% return on investment over 90 days.

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

Inflection Point Acquisition  vs.  WT Offshore

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

WT Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, WT Offshore is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Inflection Point and WT Offshore

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

The idea behind Inflection Point Acquisition and WT Offshore 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.