Correlation Between Broad Capital and Investcorp Europe

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

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

Diversification Opportunities for Broad Capital and Investcorp Europe

0.87

Correlation Coefficient

Broad Capital  Investcorp Europe

Very poor diversification

The 3 months correlation between Broad and Investcorp is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Investcorp Europe Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Europe and Broad Capital 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 Broad Capital Acquisition are associated (or correlated) with Investcorp Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Europe has no effect on the direction of Broad Capital i.e., Broad Capital and Investcorp Europe go up and down completely randomly.

Pair Corralation between Broad Capital and Investcorp Europe

Given the investment horizon of 90 days Broad Capital is expected to generate 1.9 times less return on investment than Investcorp Europe. But when comparing it to its historical volatility, Broad Capital Acquisition is 1.59 times less risky than Investcorp Europe. It trades about 0.18 of its potential returns per unit of risk. Investcorp Europe Acquisition is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,090  in Investcorp Europe Acquisition on September 15, 2024 and sell it today you would earn a total of  74.00  from holding Investcorp Europe Acquisition or generate 6.79% return on investment over 90 days.

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

Broad Capital Acquisition  vs.  Investcorp Europe Acquisition

Broad Capital Acquisition

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broad Capital Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Broad Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Investcorp Europe

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Europe Acquisition are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Investcorp Europe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Broad Capital and Investcorp Europe

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

The idea behind Broad Capital Acquisition and Investcorp Europe 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.