Correlation Between GSR II and Lakeshore Acquisition

Can any of the company-specific risk be diversified away by investing in both GSR II and Lakeshore 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 Lakeshore 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 Lakeshore Acquisition II, you can compare the effects of market volatilities on GSR II and Lakeshore 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 Lakeshore Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSR II and Lakeshore Acquisition.

Diversification Opportunities for GSR II and Lakeshore Acquisition

0.79

Correlation Coefficient

GSR II  Lakeshore Acquisition

Poor diversification

The 3 months correlation between GSR and Lakeshore is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GSR II Meteora and Lakeshore Acquisition II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeshore 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 Lakeshore Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeshore Acquisition has no effect on the direction of GSR II i.e., GSR II and Lakeshore Acquisition go up and down completely randomly.

Pair Corralation between GSR II and Lakeshore Acquisition

If you would invest  1,062  in Lakeshore Acquisition II on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Lakeshore Acquisition II or generate 0.0% return on investment over 90 days.

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

GSR II Meteora  vs.  Lakeshore Acquisition II

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 fairly stable primary indicators, GSR II is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lakeshore Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GSR II and Lakeshore Acquisition

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

The idea behind GSR II Meteora and Lakeshore Acquisition 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.