Correlation Between Broad Capital and Ares Acquisition

Can any of the company-specific risk be diversified away by investing in both Broad Capital and Ares 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 Broad Capital and Ares Acquisition 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 Ares Acquisition, you can compare the effects of market volatilities on Broad Capital and Ares 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 Broad Capital with a short position of Ares Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broad Capital and Ares Acquisition.

Diversification Opportunities for Broad Capital and Ares Acquisition

-0.45

Correlation Coefficient

Broad Capital  Ares Acquisition

Very good diversification

The 3 months correlation between Broad and Ares is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Ares Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Acquisition 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 Ares Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Acquisition has no effect on the direction of Broad Capital i.e., Broad Capital and Ares Acquisition go up and down completely randomly.

Pair Corralation between Broad Capital and Ares Acquisition

Assuming the 90 days horizon Broad Capital Acquisition is expected to generate 40.05 times more return on investment than Ares Acquisition. However, Broad Capital is 40.05 times more volatile than Ares Acquisition. It trades about 0.09 of its potential returns per unit of risk. Ares Acquisition is currently generating about 0.01 per unit of risk. If you would invest  17.00  in Broad Capital Acquisition on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Broad Capital Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.13%
Values	Daily Returns

Broad Capital Acquisition  vs.  Ares Acquisition

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Broad Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental indicators, Broad Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Ares Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ares Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ares Acquisition is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Broad Capital and Ares Acquisition

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

The idea behind Broad Capital Acquisition and Ares 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.