Correlation Between A SPAC and Healthcare

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

Diversification Opportunities for A SPAC and Healthcare

0.3

Correlation Coefficient

A SPAC  Healthcare

Weak diversification

The 3 months correlation between ASCB and Healthcare is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding A SPAC II and Healthcare AI Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare AI 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 Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare AI Acquisition has no effect on the direction of A SPAC i.e., A SPAC and Healthcare go up and down completely randomly.

Pair Corralation between A SPAC and Healthcare

Given the investment horizon of 90 days A SPAC II is expected to under-perform the Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, A SPAC II is 5.15 times less risky than Healthcare. The stock trades about -0.13 of its potential returns per unit of risk. The Healthcare AI Acquisition is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,123  in Healthcare AI Acquisition on September 3, 2024 and sell it today you would lose (2.00) from holding Healthcare AI Acquisition or give up 0.18% of portfolio value over 90 days.

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

A SPAC II  vs.  Healthcare AI 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.

Healthcare AI Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with A SPAC and Healthcare

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

The idea behind A SPAC II and Healthcare AI 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.