Correlation Between Broad Capital and Jaws Mustang

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

Diversification Opportunities for Broad Capital and Jaws Mustang

-0.43

Correlation Coefficient

Broad Capital  Jaws Mustang

Very good diversification

The 3 months correlation between Broad and Jaws is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Jaws Mustang Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaws Mustang 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 Jaws Mustang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaws Mustang Acquisition has no effect on the direction of Broad Capital i.e., Broad Capital and Jaws Mustang go up and down completely randomly.

Pair Corralation between Broad Capital and Jaws Mustang

Assuming the 90 days horizon Broad Capital Acquisition is expected to generate 70.17 times more return on investment than Jaws Mustang. However, Broad Capital is 70.17 times more volatile than Jaws Mustang Acquisition. It trades about 0.13 of its potential returns per unit of risk. Jaws Mustang Acquisition is currently generating about 0.06 per unit of risk. If you would invest  15.00  in Broad Capital Acquisition on September 17, 2024 and sell it today you would earn a total of  2.00  from holding Broad Capital Acquisition or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	46.34%
Values	Daily Returns

Broad Capital Acquisition  vs.  Jaws Mustang 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.

Jaws Mustang Acquisition

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Jaws Mustang Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jaws Mustang 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 Jaws Mustang

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

The idea behind Broad Capital Acquisition and Jaws Mustang 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.