Correlation Between CO2 Energy and A SPAC

Can any of the company-specific risk be diversified away by investing in both CO2 Energy and A 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 CO2 Energy and A SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CO2 Energy Transition and A SPAC III, you can compare the effects of market volatilities on CO2 Energy and A 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 CO2 Energy with a short position of A SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CO2 Energy and A SPAC.

Diversification Opportunities for CO2 Energy and A SPAC

0.66

Correlation Coefficient

CO2 Energy  A SPAC

Poor diversification

The 3 months correlation between CO2 and ASPC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CO2 Energy Transition and A SPAC III in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A SPAC III and CO2 Energy 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 CO2 Energy Transition are associated (or correlated) with A SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A SPAC III has no effect on the direction of CO2 Energy i.e., CO2 Energy and A SPAC go up and down completely randomly.

Pair Corralation between CO2 Energy and A SPAC

Given the investment horizon of 90 days CO2 Energy is expected to generate 3.8 times less return on investment than A SPAC. But when comparing it to its historical volatility, CO2 Energy Transition is 12.21 times less risky than A SPAC. It trades about 0.14 of its potential returns per unit of risk. A SPAC III is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,030  in A SPAC III on August 30, 2025 and sell it today you would earn a total of  35.00  from holding A SPAC III or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

CO2 Energy Transition  vs.  A SPAC III

CO2 Energy Transition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CO2 Energy Transition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, CO2 Energy is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

A SPAC III

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in A SPAC III are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, A SPAC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CO2 Energy and A SPAC

The main advantage of trading using opposite CO2 Energy and A SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CO2 Energy position performs unexpectedly, A 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 A SPAC will offset losses from the drop in A SPAC's long position.

The idea behind CO2 Energy Transition and A SPAC III 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.