Correlation Between A SPAC and DP Cap

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

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

Diversification Opportunities for A SPAC and DP Cap

0.34

Correlation Coefficient

A SPAC  DP Cap

Weak diversification

The 3 months correlation between ASCB and DPCSW is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding A SPAC II and DP Cap Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DP Cap Acquisition and A SPAC 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 A SPAC II are associated (or correlated) with DP Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DP Cap Acquisition has no effect on the direction of A SPAC i.e., A SPAC and DP Cap go up and down completely randomly.

Pair Corralation between A SPAC and DP Cap

Given the investment horizon of 90 days A SPAC II is expected to under-perform the DP Cap. But the stock apears to be less risky and, when comparing its historical volatility, A SPAC II is 697.11 times less risky than DP Cap. The stock trades about -0.13 of its potential returns per unit of risk. The DP Cap Acquisition is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.00  in DP Cap Acquisition on September 3, 2024 and sell it today you would earn a total of  2.50  from holding DP Cap Acquisition or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

A SPAC II  vs.  DP Cap Acquisition

A SPAC II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A SPAC II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, A SPAC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

DP Cap Acquisition

Risk-Adjusted Performance

0 of 100

Good

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

Pair Trading with A SPAC and DP Cap

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

The idea behind A SPAC II and DP Cap 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.