Correlation Between TLGY Acquisition and Latamgrowth SPAC

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

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

Diversification Opportunities for TLGY Acquisition and Latamgrowth SPAC

-0.13

Correlation Coefficient

TLGY Acquisition  Latamgrowth SPAC

Good diversification

The 3 months correlation between TLGY and Latamgrowth is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding TLGY Acquisition Corp and Latamgrowth SPAC Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latamgrowth SPAC Unit and TLGY 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 TLGY Acquisition Corp are associated (or correlated) with Latamgrowth SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latamgrowth SPAC Unit has no effect on the direction of TLGY Acquisition i.e., TLGY Acquisition and Latamgrowth SPAC go up and down completely randomly.

Pair Corralation between TLGY Acquisition and Latamgrowth SPAC

Given the investment horizon of 90 days TLGY Acquisition is expected to generate 1.48 times less return on investment than Latamgrowth SPAC. But when comparing it to its historical volatility, TLGY Acquisition Corp is 23.28 times less risky than Latamgrowth SPAC. It trades about 0.24 of its potential returns per unit of risk. Latamgrowth SPAC Unit is currently generating about 0.02 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TLGY Acquisition Corp  vs.  Latamgrowth SPAC Unit

TLGY Acquisition Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TLGY Acquisition Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, TLGY Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with TLGY Acquisition and Latamgrowth SPAC

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

The idea behind TLGY Acquisition Corp and Latamgrowth SPAC Unit 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.