Correlation Between BurTech Acquisition and BaringtonHilco Acquisition

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

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

Diversification Opportunities for BurTech Acquisition and BaringtonHilco Acquisition

0.63

Correlation Coefficient

BurTech Acquisition  BaringtonHilco Acquisition

Poor diversification

The 3 months correlation between BurTech and BaringtonHilco is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BurTech Acquisition Corp and BaringtonHilco Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BaringtonHilco Acquisition and BurTech Acquisition 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 BurTech Acquisition Corp are associated (or correlated) with BaringtonHilco Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BaringtonHilco Acquisition has no effect on the direction of BurTech Acquisition i.e., BurTech Acquisition and BaringtonHilco Acquisition go up and down completely randomly.

Pair Corralation between BurTech Acquisition and BaringtonHilco Acquisition

Assuming the 90 days horizon BurTech Acquisition Corp is expected to under-perform the BaringtonHilco Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, BurTech Acquisition Corp is 1.26 times less risky than BaringtonHilco Acquisition. The stock trades about -0.09 of its potential returns per unit of risk. The BaringtonHilco Acquisition is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,050  in BaringtonHilco Acquisition on September 18, 2024 and sell it today you would lose (18.00) from holding BaringtonHilco Acquisition or give up 1.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	36.51%
Values	Daily Returns

BurTech Acquisition Corp  vs.  BaringtonHilco Acquisition

BurTech Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

BaringtonHilco Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BaringtonHilco Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BaringtonHilco Acquisition is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BurTech Acquisition and BaringtonHilco Acquisition

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

The idea behind BurTech Acquisition Corp and BaringtonHilco 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.