Correlation Between Eureka Acquisition and BaringtonHilco Acquisition

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

Diversification Opportunities for Eureka Acquisition and BaringtonHilco Acquisition

-0.6

Correlation Coefficient

Eureka Acquisition  BaringtonHilco Acquisition

Excellent diversification

The 3 months correlation between Eureka and BaringtonHilco is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eureka 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 Eureka 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 Eureka 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 Eureka Acquisition i.e., Eureka Acquisition and BaringtonHilco Acquisition go up and down completely randomly.

Pair Corralation between Eureka Acquisition and BaringtonHilco Acquisition

Given the investment horizon of 90 days Eureka Acquisition Corp is expected to generate 0.06 times more return on investment than BaringtonHilco Acquisition. However, Eureka Acquisition Corp is 16.59 times less risky than BaringtonHilco Acquisition. It trades about 0.22 of its potential returns per unit of risk. BaringtonHilco Acquisition is currently generating about -0.05 per unit of risk. If you would invest  1,004  in Eureka Acquisition Corp on September 18, 2024 and sell it today you would earn a total of  11.00  from holding Eureka Acquisition Corp or generate 1.1% return on investment over 90 days.

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

Eureka Acquisition Corp  vs.  BaringtonHilco Acquisition

Eureka Acquisition Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Acquisition Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eureka Acquisition is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional 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 Eureka Acquisition and BaringtonHilco Acquisition

The main advantage of trading using opposite Eureka Acquisition and BaringtonHilco Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eureka 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 Eureka 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.