Correlation Between GSR II and Constellation Acquisition

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

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

Diversification Opportunities for GSR II and Constellation Acquisition

-0.46

Correlation Coefficient

GSR II  Constellation Acquisition

Very good diversification

The 3 months correlation between GSR and Constellation is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding GSR II Meteora and Constellation Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Acquisition and GSR II 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 GSR II Meteora are associated (or correlated) with Constellation Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Acquisition has no effect on the direction of GSR II i.e., GSR II and Constellation Acquisition go up and down completely randomly.

Pair Corralation between GSR II and Constellation Acquisition

If you would invest  1,072  in Constellation Acquisition Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Constellation Acquisition Corp or generate 0.0% return on investment over 90 days.

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

GSR II Meteora  vs.  Constellation Acquisition Corp

GSR II Meteora

Risk-Adjusted Performance

0 of 100

Very Weak

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

Constellation Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellation Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Constellation Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GSR II and Constellation Acquisition

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

The idea behind GSR II Meteora and Constellation Acquisition Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.