Correlation Between Mountain I and Nocturne Acquisition

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

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

Diversification Opportunities for Mountain I and Nocturne Acquisition

-0.15

Correlation Coefficient

Mountain I  Nocturne Acquisition

Good diversification

The 3 months correlation between Mountain and Nocturne is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mountain I Acquisition and Nocturne Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nocturne Acquisition Corp and Mountain I 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 I Acquisition are associated (or correlated) with Nocturne Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nocturne Acquisition Corp has no effect on the direction of Mountain I i.e., Mountain I and Nocturne Acquisition go up and down completely randomly.

Pair Corralation between Mountain I and Nocturne Acquisition

Given the investment horizon of 90 days Mountain I is expected to generate 15.7 times less return on investment than Nocturne Acquisition. But when comparing it to its historical volatility, Mountain I Acquisition is 53.36 times less risky than Nocturne Acquisition. It trades about 0.33 of its potential returns per unit of risk. Nocturne Acquisition Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,050  in Nocturne Acquisition Corp on January 28, 2024 and sell it today you would earn a total of  116.00  from holding Nocturne Acquisition Corp or generate 11.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.91%
Values	Daily Returns

Mountain I Acquisition  vs.  Nocturne Acquisition Corp

Mountain I Acquisition

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mountain I Acquisition are ranked lower than 24 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Nocturne Acquisition Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Nocturne Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Nocturne Acquisition exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mountain I and Nocturne Acquisition

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

The idea behind Mountain I Acquisition and Nocturne Acquisition Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.