Correlation Between American Acquisition and Brilliant Acquisition

Can any of the company-specific risk be diversified away by investing in both American Acquisition and Brilliant 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 Brilliant 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 Brilliant Acquisition, you can compare the effects of market volatilities on American Acquisition and Brilliant 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 Brilliant Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Acquisition and Brilliant Acquisition.

Diversification Opportunities for American Acquisition and Brilliant Acquisition

-0.02

Correlation Coefficient

American Acquisition  Brilliant Acquisition

Good diversification

The 3 months correlation between American and Brilliant is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding American Acquisition Opportuni and Brilliant Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brilliant Acquisition 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 Brilliant Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brilliant Acquisition has no effect on the direction of American Acquisition i.e., American Acquisition and Brilliant Acquisition go up and down completely randomly.

Pair Corralation between American Acquisition and Brilliant Acquisition

If you would invest  4.89  in Brilliant Acquisition on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Brilliant Acquisition or generate 0.0% return on investment over 90 days.

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

American Acquisition Opportuni  vs.  Brilliant Acquisition

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 fairly stable basic indicators, American Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Brilliant Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brilliant Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Brilliant Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with American Acquisition and Brilliant Acquisition

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

The idea behind American Acquisition Opportunity and Brilliant Acquisition 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.