Correlation Between Bayview Acquisition and Distoken Acquisition

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

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

Diversification Opportunities for Bayview Acquisition and Distoken Acquisition

-0.21

Correlation Coefficient

Bayview Acquisition  Distoken Acquisition

Very good diversification

The 3 months correlation between Bayview and Distoken is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bayview Acquisition Corp and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition and Bayview 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 Bayview Acquisition Corp are associated (or correlated) with Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of Bayview Acquisition i.e., Bayview Acquisition and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Bayview Acquisition and Distoken Acquisition

Assuming the 90 days horizon Bayview Acquisition Corp is expected to generate 9.01 times more return on investment than Distoken Acquisition. However, Bayview Acquisition is 9.01 times more volatile than Distoken Acquisition. It trades about 0.16 of its potential returns per unit of risk. Distoken Acquisition is currently generating about -0.01 per unit of risk. If you would invest  15.00  in Bayview Acquisition Corp on December 30, 2024 and sell it today you would earn a total of  6.00  from holding Bayview Acquisition Corp or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	48.39%
Values	Daily Returns

Bayview Acquisition Corp  vs.  Distoken Acquisition

Bayview Acquisition Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bayview Acquisition Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Bayview Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Distoken Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Distoken Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Distoken Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bayview Acquisition and Distoken Acquisition

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

The idea behind Bayview Acquisition Corp and Distoken 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.