Correlation Between Mountain Crest and Mountain I

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

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

Diversification Opportunities for Mountain Crest and Mountain I

0.68

Correlation Coefficient

Mountain Crest  Mountain I

Poor diversification

The 3 months correlation between Mountain and Mountain is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mountain Crest Acquisition and Mountain I Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain I Acquisition and Mountain Crest 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 Mountain Crest Acquisition are associated (or correlated) with Mountain I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain I Acquisition has no effect on the direction of Mountain Crest i.e., Mountain Crest and Mountain I go up and down completely randomly.

Pair Corralation between Mountain Crest and Mountain I

Given the investment horizon of 90 days Mountain Crest Acquisition is expected to generate 2.95 times more return on investment than Mountain I. However, Mountain Crest is 2.95 times more volatile than Mountain I Acquisition. It trades about 0.17 of its potential returns per unit of risk. Mountain I Acquisition is currently generating about 0.1 per unit of risk. If you would invest  1,079  in Mountain Crest Acquisition on August 1, 2024 and sell it today you would earn a total of  58.00  from holding Mountain Crest Acquisition or generate 5.38% return on investment over 90 days.

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

Mountain Crest Acquisition  vs.  Mountain I Acquisition

Mountain Crest Acqui

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mountain Crest Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Mountain Crest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Mountain I Acquisition

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mountain I Acquisition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mountain I is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mountain Crest and Mountain I

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

The idea behind Mountain Crest Acquisition and Mountain I Acquisition 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.