Correlation Between LanzaTech Global and Majic Wheels

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

By analyzing existing cross correlation between LanzaTech Global and Majic Wheels Corp, you can compare the effects of market volatilities on LanzaTech Global and Majic Wheels 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 LanzaTech Global with a short position of Majic Wheels. Check out your portfolio center. Please also check ongoing floating volatility patterns of LanzaTech Global and Majic Wheels.

Diversification Opportunities for LanzaTech Global and Majic Wheels

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Correlation Coefficient

LanzaTech Global  Majic Wheels

Pay attention - limited upside

The 3 months correlation between LanzaTech and Majic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LanzaTech Global and Majic Wheels Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Majic Wheels Corp and LanzaTech Global 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 LanzaTech Global are associated (or correlated) with Majic Wheels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Majic Wheels Corp has no effect on the direction of LanzaTech Global i.e., LanzaTech Global and Majic Wheels go up and down completely randomly.

Pair Corralation between LanzaTech Global and Majic Wheels

Assuming the 90 days horizon LanzaTech Global is expected to generate 1.89 times more return on investment than Majic Wheels. However, LanzaTech Global is 1.89 times more volatile than Majic Wheels Corp. It trades about 0.05 of its potential returns per unit of risk. Majic Wheels Corp is currently generating about 0.06 per unit of risk. If you would invest  37.00  in LanzaTech Global on September 14, 2024 and sell it today you would lose (28.25) from holding LanzaTech Global or give up 76.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	87.45%
Values	Daily Returns

LanzaTech Global  vs.  Majic Wheels Corp

LanzaTech Global

Risk-Adjusted Performance

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Very Weak

Over the last 90 days LanzaTech Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Majic Wheels Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with LanzaTech Global and Majic Wheels

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

The idea behind LanzaTech Global and Majic Wheels Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.