Correlation Between Arq and Black Spade

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

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

Diversification Opportunities for Arq and Black Spade

0.64

Correlation Coefficient

Arq  Black Spade

Poor diversification

The 3 months correlation between Arq and Black is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Arq Inc and Black Spade Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Spade Acquisition and Arq 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 Arq Inc are associated (or correlated) with Black Spade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Spade Acquisition has no effect on the direction of Arq i.e., Arq and Black Spade go up and down completely randomly.

Pair Corralation between Arq and Black Spade

Considering the 90-day investment horizon Arq Inc is expected to under-perform the Black Spade. In addition to that, Arq is 16.7 times more volatile than Black Spade Acquisition. It trades about -0.07 of its total potential returns per unit of risk. Black Spade Acquisition is currently generating about -0.22 per unit of volatility. If you would invest  1,016  in Black Spade Acquisition on October 10, 2024 and sell it today you would lose (10.00) from holding Black Spade Acquisition or give up 0.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Arq Inc  vs.  Black Spade Acquisition

Arq Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arq Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Arq reported solid returns over the last few months and may actually be approaching a breakup point.

Black Spade Acquisition

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Black Spade Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Black Spade is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Arq and Black Spade

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

The idea behind Arq Inc and Black Spade 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.