Correlation Between AIB Acquisition and Dream Residential

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

Diversification Opportunities for AIB Acquisition and Dream Residential

-0.84

Correlation Coefficient

AIB Acquisition  Dream Residential

Pay attention - limited upside

The 3 months correlation between AIB and Dream is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding AIB Acquisition Corp and Dream Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Residential Real 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 Dream Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Residential Real has no effect on the direction of AIB Acquisition i.e., AIB Acquisition and Dream Residential go up and down completely randomly.

Pair Corralation between AIB Acquisition and Dream Residential

If you would invest  1,091  in AIB Acquisition Corp on October 6, 2024 and sell it today you would earn a total of  0.00  from holding AIB Acquisition Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	2.38%
Values	Daily Returns

AIB Acquisition Corp  vs.  Dream Residential Real

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. In spite of comparatively stable fundamental drivers, AIB Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Dream Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AIB Acquisition and Dream Residential

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

The idea behind AIB Acquisition Corp and Dream Residential Real 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.