Correlation Between Reborn Coffee and Aquaron Acquisition

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

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

Diversification Opportunities for Reborn Coffee and Aquaron Acquisition

-0.78

Correlation Coefficient

Reborn Coffee  Aquaron Acquisition

Pay attention - limited upside

The 3 months correlation between Reborn and Aquaron is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Reborn Coffee and Aquaron Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquaron Acquisition Corp and Reborn Coffee 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 Reborn Coffee are associated (or correlated) with Aquaron Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquaron Acquisition Corp has no effect on the direction of Reborn Coffee i.e., Reborn Coffee and Aquaron Acquisition go up and down completely randomly.

Pair Corralation between Reborn Coffee and Aquaron Acquisition

Given the investment horizon of 90 days Reborn Coffee is expected to under-perform the Aquaron Acquisition. In addition to that, Reborn Coffee is 4.05 times more volatile than Aquaron Acquisition Corp. It trades about -0.21 of its total potential returns per unit of risk. Aquaron Acquisition Corp is currently generating about 0.18 per unit of volatility. If you would invest  1,101  in Aquaron Acquisition Corp on September 14, 2024 and sell it today you would earn a total of  36.00  from holding Aquaron Acquisition Corp or generate 3.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	18.75%
Values	Daily Returns

Reborn Coffee  vs.  Aquaron Acquisition Corp

Reborn Coffee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reborn Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aquaron Acquisition Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aquaron Acquisition Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Aquaron Acquisition unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reborn Coffee and Aquaron Acquisition

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

The idea behind Reborn Coffee and Aquaron 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.