Correlation Between American Acquisition and BioPlus Acquisition

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

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

Diversification Opportunities for American Acquisition and BioPlus Acquisition

0.59

Correlation Coefficient

American Acquisition  BioPlus Acquisition

Very weak diversification

The 3 months correlation between American and BioPlus is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Acquisition Opportuni and BioPlus Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioPlus Acquisition Corp and American 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 American Acquisition Opportunity are associated (or correlated) with BioPlus Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioPlus Acquisition Corp has no effect on the direction of American Acquisition i.e., American Acquisition and BioPlus Acquisition go up and down completely randomly.

Pair Corralation between American Acquisition and BioPlus Acquisition

If you would invest  1,073  in BioPlus Acquisition Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding BioPlus Acquisition Corp or generate 0.0% return on investment over 90 days.

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

American Acquisition Opportuni  vs.  BioPlus Acquisition Corp

American Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Acquisition Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, American Acquisition is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

BioPlus Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioPlus Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BioPlus Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Acquisition and BioPlus Acquisition

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

The idea behind American Acquisition Opportunity and BioPlus 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.