Correlation Between Moringa Acquisition and Nephros

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

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

Diversification Opportunities for Moringa Acquisition and Nephros

-0.71

Correlation Coefficient

Moringa Acquisition  Nephros

Pay attention - limited upside

The 3 months correlation between Moringa and Nephros is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Moringa Acquisition Corp and Nephros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nephros and Moringa 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 Moringa Acquisition Corp are associated (or correlated) with Nephros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nephros has no effect on the direction of Moringa Acquisition i.e., Moringa Acquisition and Nephros go up and down completely randomly.

Pair Corralation between Moringa Acquisition and Nephros

Given the investment horizon of 90 days Moringa Acquisition is expected to generate 8.03 times less return on investment than Nephros. But when comparing it to its historical volatility, Moringa Acquisition Corp is 8.11 times less risky than Nephros. It trades about 0.06 of its potential returns per unit of risk. Nephros is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  144.00  in Nephros on January 26, 2024 and sell it today you would earn a total of  75.00  from holding Nephros or generate 52.08% return on investment over 90 days.

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

Moringa Acquisition Corp  vs.  Nephros

Moringa Acquisition Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moringa Acquisition Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Moringa Acquisition is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Nephros

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nephros has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Moringa Acquisition and Nephros

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

The idea behind Moringa Acquisition Corp and Nephros 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.