Correlation Between Bellevue Life and Embrace Change

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

By analyzing existing cross correlation between Bellevue Life Sciences and Embrace Change Acquisition, you can compare the effects of market volatilities on Bellevue Life and Embrace Change 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 Bellevue Life with a short position of Embrace Change. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bellevue Life and Embrace Change.

Diversification Opportunities for Bellevue Life and Embrace Change

0.05

Correlation Coefficient

Bellevue Life  Embrace Change

Significant diversification

The 3 months correlation between Bellevue and Embrace is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bellevue Life Sciences and Embrace Change Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embrace Change Acqui and Bellevue Life 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 Bellevue Life Sciences are associated (or correlated) with Embrace Change. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embrace Change Acqui has no effect on the direction of Bellevue Life i.e., Bellevue Life and Embrace Change go up and down completely randomly.

Pair Corralation between Bellevue Life and Embrace Change

Given the investment horizon of 90 days Bellevue Life is expected to generate 54.06 times less return on investment than Embrace Change. But when comparing it to its historical volatility, Bellevue Life Sciences is 20.38 times less risky than Embrace Change. It trades about 0.04 of its potential returns per unit of risk. Embrace Change Acquisition is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2.97  in Embrace Change Acquisition on September 15, 2024 and sell it today you would lose (0.67) from holding Embrace Change Acquisition or give up 22.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	34.38%
Values	Daily Returns

Bellevue Life Sciences  vs.  Embrace Change Acquisition

Bellevue Life Sciences

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bellevue Life Sciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Bellevue Life is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Embrace Change Acqui

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Embrace Change showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bellevue Life and Embrace Change

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

The idea behind Bellevue Life Sciences and Embrace Change 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.