Correlation Between FG Merger and Chavant Capital

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

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

Diversification Opportunities for FG Merger and Chavant Capital

0.58

Correlation Coefficient

FG Merger  Chavant Capital

Very weak diversification

The 3 months correlation between FGMC and Chavant is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding FG Merger Corp and Chavant Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chavant Capital Acqu and FG Merger 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 FG Merger Corp are associated (or correlated) with Chavant Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chavant Capital Acqu has no effect on the direction of FG Merger i.e., FG Merger and Chavant Capital go up and down completely randomly.

Pair Corralation between FG Merger and Chavant Capital

If you would invest  1,194  in Chavant Capital Acquisition on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Chavant Capital Acquisition or generate 0.0% return on investment over 90 days.

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

FG Merger Corp  vs.  Chavant Capital Acquisition

FG Merger Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Chavant Capital Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FG Merger and Chavant Capital

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

The idea behind FG Merger Corp and Chavant Capital 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.