Correlation Between Compute Health and Frontier Investment

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Compute Health and Frontier Investment 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 Compute Health and Frontier Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compute Health Acquisition and Frontier Investment Corp, you can compare the effects of market volatilities on Compute Health and Frontier Investment 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 Compute Health with a short position of Frontier Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compute Health and Frontier Investment.

Diversification Opportunities for Compute Health and Frontier Investment

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Compute and Frontier is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Compute Health Acquisition and Frontier Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Investment Corp and Compute Health 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 Compute Health Acquisition are associated (or correlated) with Frontier Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Investment Corp has no effect on the direction of Compute Health i.e., Compute Health and Frontier Investment go up and down completely randomly.

Pair Corralation between Compute Health and Frontier Investment

Given the investment horizon of 90 days Compute Health Acquisition is expected to generate 0.44 times more return on investment than Frontier Investment. However, Compute Health Acquisition is 2.28 times less risky than Frontier Investment. It trades about 0.21 of its potential returns per unit of risk. Frontier Investment Corp is currently generating about 0.08 per unit of risk. If you would invest  1,005  in Compute Health Acquisition on September 6, 2024 and sell it today you would earn a total of  57.00  from holding Compute Health Acquisition or generate 5.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.33%
ValuesDaily Returns

Compute Health Acquisition  vs.  Frontier Investment Corp

 Performance 
       Timeline  
Compute Health Acqui 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Compute Health Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Compute Health is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
Frontier Investment Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Frontier Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Frontier Investment is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Compute Health and Frontier Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Compute Health and Frontier Investment

The main advantage of trading using opposite Compute Health and Frontier Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compute Health position performs unexpectedly, Frontier Investment 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 Frontier Investment will offset losses from the drop in Frontier Investment's long position.
The idea behind Compute Health Acquisition and Frontier Investment 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

Other Complementary Tools

Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Money Managers
Screen money managers from public funds and ETFs managed around the world
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum