Correlation Between OCA Acquisition and Global Partner

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

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

Diversification Opportunities for OCA Acquisition and Global Partner

0.26

Correlation Coefficient

OCA Acquisition  Global Partner

Modest diversification

The 3 months correlation between OCA and Global is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding OCA Acquisition Corp and Global Partner Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partner Acq and OCA Acquisition 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 OCA Acquisition Corp are associated (or correlated) with Global Partner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partner Acq has no effect on the direction of OCA Acquisition i.e., OCA Acquisition and Global Partner go up and down completely randomly.

Pair Corralation between OCA Acquisition and Global Partner

Assuming the 90 days horizon OCA Acquisition Corp is expected to generate 1.64 times more return on investment than Global Partner. However, OCA Acquisition is 1.64 times more volatile than Global Partner Acq. It trades about 0.02 of its potential returns per unit of risk. Global Partner Acq is currently generating about 0.0 per unit of risk. If you would invest  1,025  in OCA Acquisition Corp on September 20, 2024 and sell it today you would earn a total of  85.00  from holding OCA Acquisition Corp or generate 8.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.19%
Values	Daily Returns

OCA Acquisition Corp  vs.  Global Partner Acq

OCA Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCA Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OCA Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Global Partner Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Partner Acq has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Global Partner is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with OCA Acquisition and Global Partner

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

The idea behind OCA Acquisition Corp and Global Partner Acq 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.