Correlation Between LAVA Medtech and Acri Capital

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Can any of the company-specific risk be diversified away by investing in both LAVA Medtech and Acri 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 LAVA Medtech and Acri Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAVA Medtech Acquisition and Acri Capital Acquisition, you can compare the effects of market volatilities on LAVA Medtech and Acri 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 LAVA Medtech with a short position of Acri Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAVA Medtech and Acri Capital.

Diversification Opportunities for LAVA Medtech and Acri Capital

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between LAVA and Acri is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding LAVA Medtech Acquisition and Acri Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acri Capital Acquisition and LAVA Medtech 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 LAVA Medtech Acquisition are associated (or correlated) with Acri Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acri Capital Acquisition has no effect on the direction of LAVA Medtech i.e., LAVA Medtech and Acri Capital go up and down completely randomly.

Pair Corralation between LAVA Medtech and Acri Capital

If you would invest  1,121  in Acri Capital Acquisition on September 5, 2024 and sell it today you would lose (31.00) from holding Acri Capital Acquisition or give up 2.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy5.56%
ValuesDaily Returns

LAVA Medtech Acquisition  vs.  Acri Capital Acquisition

 Performance 
       Timeline  
LAVA Medtech Acquisition 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LAVA Medtech Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, LAVA Medtech is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Acri Capital Acquisition 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Acri Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Acri Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

LAVA Medtech and Acri Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LAVA Medtech and Acri Capital

The main advantage of trading using opposite LAVA Medtech and Acri Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAVA Medtech position performs unexpectedly, Acri 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 Acri Capital will offset losses from the drop in Acri Capital's long position.
The idea behind LAVA Medtech Acquisition and Acri 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.
Check out your portfolio center.
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.

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