Correlation Between LAVA Medtech and TLGY Acquisition

Can any of the company-specific risk be diversified away by investing in both LAVA Medtech and TLGY 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 LAVA Medtech and TLGY Acquisition 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 TLGY Acquisition, you can compare the effects of market volatilities on LAVA Medtech and TLGY 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 LAVA Medtech with a short position of TLGY Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAVA Medtech and TLGY Acquisition.

Diversification Opportunities for LAVA Medtech and TLGY Acquisition

0.29

Correlation Coefficient

LAVA Medtech  TLGY Acquisition

Modest diversification

The 3 months correlation between LAVA and TLGY is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LAVA Medtech Acquisition and TLGY Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLGY 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 TLGY Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLGY Acquisition has no effect on the direction of LAVA Medtech i.e., LAVA Medtech and TLGY Acquisition go up and down completely randomly.

Pair Corralation between LAVA Medtech and TLGY Acquisition

If you would invest (100.00) in TLGY Acquisition on September 17, 2024 and sell it today you would earn a total of  100.00  from holding TLGY Acquisition or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

LAVA Medtech Acquisition  vs.  TLGY Acquisition

LAVA Medtech Acquisition

Risk-Adjusted Performance

0 of 100

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.

TLGY Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TLGY Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, TLGY Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with LAVA Medtech and TLGY Acquisition

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

The idea behind LAVA Medtech Acquisition and TLGY 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.