Correlation Between Aurora Acquisition and Avalon Acquisition

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

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

Diversification Opportunities for Aurora Acquisition and Avalon Acquisition

0.31

Correlation Coefficient

Aurora Acquisition  Avalon Acquisition

Weak diversification

The 3 months correlation between Aurora and Avalon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Acquisition Corp and Avalon Acquisition Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalon Acquisition and Aurora 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 Aurora Acquisition Corp are associated (or correlated) with Avalon Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalon Acquisition has no effect on the direction of Aurora Acquisition i.e., Aurora Acquisition and Avalon Acquisition go up and down completely randomly.

Pair Corralation between Aurora Acquisition and Avalon Acquisition

If you would invest  11.00  in Avalon Acquisition Warrant on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Avalon Acquisition Warrant or generate 0.0% return on investment over 90 days.

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

Aurora Acquisition Corp  vs.  Avalon Acquisition Warrant

Aurora Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Avalon Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avalon Acquisition Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Avalon 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 Aurora Acquisition and Avalon Acquisition

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

The idea behind Aurora Acquisition Corp and Avalon Acquisition Warrant 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .