Correlation Between Prime Number and Sculptor Acquisition

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

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

Diversification Opportunities for Prime Number and Sculptor Acquisition

0.77

Correlation Coefficient

Prime Number  Sculptor Acquisition

Poor diversification

The 3 months correlation between Prime and Sculptor is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Prime Number Acquisition and Sculptor Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sculptor Acquisition Corp and Prime Number 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 Prime Number Acquisition are associated (or correlated) with Sculptor Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sculptor Acquisition Corp has no effect on the direction of Prime Number i.e., Prime Number and Sculptor Acquisition go up and down completely randomly.

Pair Corralation between Prime Number and Sculptor Acquisition

Given the investment horizon of 90 days Prime Number Acquisition is expected to generate 1.93 times more return on investment than Sculptor Acquisition. However, Prime Number is 1.93 times more volatile than Sculptor Acquisition Corp. It trades about 0.13 of its potential returns per unit of risk. Sculptor Acquisition Corp is currently generating about 0.24 per unit of risk. If you would invest  1,017  in Prime Number Acquisition on September 26, 2024 and sell it today you would earn a total of  40.00  from holding Prime Number Acquisition or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	72.99%
Values	Daily Returns

Prime Number Acquisition  vs.  Sculptor Acquisition Corp

Prime Number Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sculptor Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sculptor Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sculptor 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 Prime Number and Sculptor Acquisition

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

The idea behind Prime Number Acquisition and Sculptor 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.