Correlation Between Broad Capital and A SPAC

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

Diversification Opportunities for Broad Capital and A SPAC

-0.26

Correlation Coefficient

Broad Capital  A SPAC

Very good diversification

The 3 months correlation between Broad and ASCBU is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and A SPAC II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A SPAC II 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 A SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A SPAC II has no effect on the direction of Broad Capital i.e., Broad Capital and A SPAC go up and down completely randomly.

Pair Corralation between Broad Capital and A SPAC

Assuming the 90 days horizon Broad Capital Acquisition is expected to generate 0.14 times more return on investment than A SPAC. However, Broad Capital Acquisition is 7.33 times less risky than A SPAC. It trades about -0.04 of its potential returns per unit of risk. A SPAC II is currently generating about -0.33 per unit of risk. If you would invest  1,137  in Broad Capital Acquisition on September 16, 2024 and sell it today you would lose (6.00) from holding Broad Capital Acquisition or give up 0.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	13.85%
Values	Daily Returns

Broad Capital Acquisition  vs.  A SPAC II

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broad Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Broad Capital is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

A SPAC II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A SPAC II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Broad Capital and A SPAC

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

The idea behind Broad Capital Acquisition and A SPAC II 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.