Correlation Between Bleuacacia and Forbion European

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

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

Diversification Opportunities for Bleuacacia and Forbion European

-0.21

Correlation Coefficient

Bleuacacia  Forbion European

Very good diversification

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

Pair Corralation between Bleuacacia and Forbion European

Assuming the 90 days horizon Bleuacacia Ltd Warrants is expected to generate 4.46 times more return on investment than Forbion European. However, Bleuacacia is 4.46 times more volatile than Forbion European Acquisition. It trades about 0.16 of its potential returns per unit of risk. Forbion European Acquisition is currently generating about 0.1 per unit of risk. If you would invest  2.00  in Bleuacacia Ltd Warrants on October 7, 2024 and sell it today you would lose (1.03) from holding Bleuacacia Ltd Warrants or give up 51.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	36.99%
Values	Daily Returns

Bleuacacia Ltd Warrants  vs.  Forbion European Acquisition

Bleuacacia Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

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

Forbion European Acq

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bleuacacia and Forbion European

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

The idea behind Bleuacacia Ltd Warrants and Forbion European 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.