Correlation Between Armada Acquisition and Arch Capital

Can any of the company-specific risk be diversified away by investing in both Armada Acquisition and Arch Capital 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 Arch Capital 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 Arch Capital Group, you can compare the effects of market volatilities on Armada Acquisition and Arch Capital 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 Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Acquisition and Arch Capital.

Diversification Opportunities for Armada Acquisition and Arch Capital

0.54

Correlation Coefficient

Armada Acquisition  Arch Capital

Very weak diversification

The 3 months correlation between Armada and Arch is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Armada Acquisition Corp and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group 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 Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Armada Acquisition i.e., Armada Acquisition and Arch Capital go up and down completely randomly.

Pair Corralation between Armada Acquisition and Arch Capital

If you would invest (100.00) in Armada Acquisition Corp on October 11, 2024 and sell it today you would earn a total of  100.00  from holding Armada Acquisition Corp or generate -100.0% return on investment over 90 days.

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

Armada Acquisition Corp  vs.  Arch Capital Group

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. In spite of fairly stable forward indicators, Armada Acquisition is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Arch Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arch Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Preferred Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Armada Acquisition and Arch Capital

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

The idea behind Armada Acquisition Corp and Arch Capital Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.