Correlation Between Waldencast Acquisition and Protek Capital

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

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

Diversification Opportunities for Waldencast Acquisition and Protek Capital

0.0

Correlation Coefficient

Waldencast Acquisition  Protek Capital

Pay attention - limited upside

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

Pair Corralation between Waldencast Acquisition and Protek Capital

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to generate 0.32 times more return on investment than Protek Capital. However, Waldencast Acquisition Corp is 3.1 times less risky than Protek Capital. It trades about -0.01 of its potential returns per unit of risk. Protek Capital is currently generating about -0.13 per unit of risk. If you would invest  344.00  in Waldencast Acquisition Corp on September 4, 2024 and sell it today you would lose (22.00) from holding Waldencast Acquisition Corp or give up 6.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Waldencast Acquisition Corp  vs.  Protek Capital

Waldencast Acquisition

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Waldencast Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Waldencast Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Protek Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protek Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Waldencast Acquisition and Protek Capital

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

The idea behind Waldencast Acquisition Corp and Protek Capital 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.