Correlation Between Insight Acquisition and Graf Acquisition

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

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

Diversification Opportunities for Insight Acquisition and Graf Acquisition

-0.02

Correlation Coefficient

Insight Acquisition  Graf Acquisition

Good diversification

The 3 months correlation between Insight and Graf is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Insight Acquisition Corp and Graf Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graf Acquisition Corp and Insight 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 Insight Acquisition Corp are associated (or correlated) with Graf Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graf Acquisition Corp has no effect on the direction of Insight Acquisition i.e., Insight Acquisition and Graf Acquisition go up and down completely randomly.

Pair Corralation between Insight Acquisition and Graf Acquisition

Given the investment horizon of 90 days Insight Acquisition Corp is expected to generate 9.26 times more return on investment than Graf Acquisition. However, Insight Acquisition is 9.26 times more volatile than Graf Acquisition Corp. It trades about 0.02 of its potential returns per unit of risk. Graf Acquisition Corp is currently generating about 0.13 per unit of risk. If you would invest  1,023  in Insight Acquisition Corp on September 14, 2024 and sell it today you would earn a total of  122.00  from holding Insight Acquisition Corp or generate 11.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	10.94%
Values	Daily Returns

Insight Acquisition Corp  vs.  Graf Acquisition Corp

Insight Acquisition Corp

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Insight Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Insight Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Graf Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graf Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Graf Acquisition is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Insight Acquisition and Graf Acquisition

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

The idea behind Insight Acquisition Corp and Graf 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.