Correlation Between Consilium Acquisition and A SPAC

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

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

Diversification Opportunities for Consilium Acquisition and A SPAC

-0.08

Correlation Coefficient

Consilium Acquisition  A SPAC

Good diversification

The 3 months correlation between Consilium and ASCB is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Consilium Acquisition I 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 Consilium 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 Consilium Acquisition I 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 Consilium Acquisition i.e., Consilium Acquisition and A SPAC go up and down completely randomly.

Pair Corralation between Consilium Acquisition and A SPAC

Given the investment horizon of 90 days Consilium Acquisition I is expected to generate 10.87 times more return on investment than A SPAC. However, Consilium Acquisition is 10.87 times more volatile than A SPAC II. It trades about 0.27 of its potential returns per unit of risk. A SPAC II is currently generating about 0.22 per unit of risk. If you would invest  1,135  in Consilium Acquisition I on September 28, 2024 and sell it today you would earn a total of  14.00  from holding Consilium Acquisition I or generate 1.23% return on investment over 90 days.

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

Consilium Acquisition I  vs.  A SPAC II

Consilium Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consilium Acquisition I are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Consilium Acquisition is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the 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. Despite somewhat strong fundamental indicators, A SPAC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Consilium Acquisition and A SPAC

The main advantage of trading using opposite Consilium Acquisition and A SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consilium Acquisition 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 Consilium Acquisition I 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.