Correlation Between AIB Acquisition and Frontier Investment

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

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

Diversification Opportunities for AIB Acquisition and Frontier Investment

-0.45

Correlation Coefficient

AIB Acquisition  Frontier Investment

Very good diversification

The 3 months correlation between AIB and Frontier is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding AIB Acquisition Corp and Frontier Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Investment Corp and AIB 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 AIB Acquisition Corp are associated (or correlated) with Frontier Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Investment Corp has no effect on the direction of AIB Acquisition i.e., AIB Acquisition and Frontier Investment go up and down completely randomly.

Pair Corralation between AIB Acquisition and Frontier Investment

If you would invest  1,050  in Frontier Investment Corp on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Frontier Investment Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AIB Acquisition Corp  vs.  Frontier Investment Corp

AIB Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIB Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, AIB Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Frontier Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontier Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Frontier Investment is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AIB Acquisition and Frontier Investment

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

The idea behind AIB Acquisition Corp and Frontier Investment 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.