Correlation Between Armada Acquisition and Avalon Acquisition

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

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

Diversification Opportunities for Armada Acquisition and Avalon Acquisition

0.55

Correlation Coefficient

Armada Acquisition  Avalon Acquisition

Very weak diversification

The 3 months correlation between Armada and Avalon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Armada Acquisition Corp and Avalon Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalon Acquisition and Armada Acquisition 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 Armada Acquisition Corp are associated (or correlated) with Avalon Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalon Acquisition has no effect on the direction of Armada Acquisition i.e., Armada Acquisition and Avalon Acquisition go up and down completely randomly.

Pair Corralation between Armada Acquisition and Avalon Acquisition

Given the investment horizon of 90 days Armada Acquisition Corp is expected to under-perform the Avalon Acquisition. In addition to that, Armada Acquisition is 4.16 times more volatile than Avalon Acquisition. It trades about -0.04 of its total potential returns per unit of risk. Avalon Acquisition is currently generating about -0.07 per unit of volatility. If you would invest  1,022  in Avalon Acquisition on September 18, 2024 and sell it today you would lose (112.00) from holding Avalon Acquisition or give up 10.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	26.6%
Values	Daily Returns

Armada Acquisition Corp  vs.  Avalon Acquisition

Armada Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Avalon Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Armada Acquisition and Avalon Acquisition

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

The idea behind Armada Acquisition Corp and Avalon 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 Commodity Directory module to find actively traded commodities issued by global exchanges.