Correlation Between Four Leaf and A SPAC

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

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

Diversification Opportunities for Four Leaf and A SPAC

-0.02

Correlation Coefficient

Four Leaf  A SPAC

Good diversification

The 3 months correlation between Four and ASCBU is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Four Leaf 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 Four Leaf 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 Four Leaf 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 Four Leaf i.e., Four Leaf and A SPAC go up and down completely randomly.

Pair Corralation between Four Leaf and A SPAC

Assuming the 90 days horizon Four Leaf is expected to generate 1.01 times less return on investment than A SPAC. But when comparing it to its historical volatility, Four Leaf Acquisition is 10.8 times less risky than A SPAC. It trades about 0.13 of its potential returns per unit of risk. A SPAC II is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,084  in A SPAC II on September 15, 2024 and sell it today you would earn a total of  16.00  from holding A SPAC II or generate 1.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.82%
Values	Daily Returns

Four Leaf Acquisition  vs.  A SPAC II

Four Leaf Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Leaf Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Four Leaf 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 Four Leaf and A SPAC

The main advantage of trading using opposite Four Leaf and A SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Leaf 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 Four Leaf 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.