Correlation Between Acropolis Infrastructure and ARYA Sciences

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

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

Diversification Opportunities for Acropolis Infrastructure and ARYA Sciences

0.47

Correlation Coefficient

Acropolis Infrastructure  ARYA Sciences

Very weak diversification

The 3 months correlation between Acropolis and ARYA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Acropolis Infrastructure Acqui and ARYA Sciences Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARYA Sciences Acquisition and Acropolis Infrastructure 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 Acropolis Infrastructure Acquisition are associated (or correlated) with ARYA Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARYA Sciences Acquisition has no effect on the direction of Acropolis Infrastructure i.e., Acropolis Infrastructure and ARYA Sciences go up and down completely randomly.

Pair Corralation between Acropolis Infrastructure and ARYA Sciences

Given the investment horizon of 90 days Acropolis Infrastructure Acquisition is expected to generate 0.12 times more return on investment than ARYA Sciences. However, Acropolis Infrastructure Acquisition is 8.26 times less risky than ARYA Sciences. It trades about -0.02 of its potential returns per unit of risk. ARYA Sciences Acquisition is currently generating about -0.04 per unit of risk. If you would invest  1,027  in Acropolis Infrastructure Acquisition on October 11, 2024 and sell it today you would lose (11.00) from holding Acropolis Infrastructure Acquisition or give up 1.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	31.92%
Values	Daily Returns

Acropolis Infrastructure Acqui  vs.  ARYA Sciences Acquisition

Acropolis Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acropolis Infrastructure Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Acropolis Infrastructure is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

ARYA Sciences Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Acropolis Infrastructure and ARYA Sciences

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

The idea behind Acropolis Infrastructure Acquisition and ARYA Sciences 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.