Correlation Between Latamgrowth SPAC and Eastern

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

By analyzing existing cross correlation between Latamgrowth SPAC Unit and Eastern Co, you can compare the effects of market volatilities on Latamgrowth SPAC and Eastern 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 Latamgrowth SPAC with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latamgrowth SPAC and Eastern.

Diversification Opportunities for Latamgrowth SPAC and Eastern

0.15

Correlation Coefficient

Latamgrowth SPAC  Eastern

Average diversification

The 3 months correlation between Latamgrowth and Eastern is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Latamgrowth SPAC Unit and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and Latamgrowth SPAC 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 Latamgrowth SPAC Unit are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Latamgrowth SPAC i.e., Latamgrowth SPAC and Eastern go up and down completely randomly.

Pair Corralation between Latamgrowth SPAC and Eastern

Assuming the 90 days horizon Latamgrowth SPAC Unit is expected to generate 0.74 times more return on investment than Eastern. However, Latamgrowth SPAC Unit is 1.35 times less risky than Eastern. It trades about 0.02 of its potential returns per unit of risk. Eastern Co is currently generating about -0.02 per unit of risk. If you would invest  1,170  in Latamgrowth SPAC Unit on September 17, 2024 and sell it today you would earn a total of  9.00  from holding Latamgrowth SPAC Unit or generate 0.77% return on investment over 90 days.

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

Latamgrowth SPAC Unit  vs.  Eastern Co

Latamgrowth SPAC Unit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Latamgrowth SPAC Unit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Latamgrowth SPAC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Latamgrowth SPAC and Eastern

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

The idea behind Latamgrowth SPAC Unit and Eastern Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.