Correlation Between Valuence Merger and Proof Acquisition

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

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

Diversification Opportunities for Valuence Merger and Proof Acquisition

0.17

Correlation Coefficient

Valuence Merger  Proof Acquisition

Average diversification

The 3 months correlation between Valuence and Proof is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Valuence Merger Corp and Proof Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proof Acquisition and Valuence Merger 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 Valuence Merger Corp are associated (or correlated) with Proof Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proof Acquisition has no effect on the direction of Valuence Merger i.e., Valuence Merger and Proof Acquisition go up and down completely randomly.

Pair Corralation between Valuence Merger and Proof Acquisition

If you would invest  1,149  in Valuence Merger Corp on September 17, 2024 and sell it today you would earn a total of  3.01  from holding Valuence Merger Corp or generate 0.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Valuence Merger Corp  vs.  Proof Acquisition I

Valuence Merger Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valuence Merger Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Valuence Merger is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Proof Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proof Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Proof Acquisition is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Valuence Merger and Proof Acquisition

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

The idea behind Valuence Merger Corp and Proof Acquisition I 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.