Correlation Between Bannix Acquisition and TransAKT

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

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

Diversification Opportunities for Bannix Acquisition and TransAKT

0.67

Correlation Coefficient

Bannix Acquisition  TransAKT

Poor diversification

The 3 months correlation between Bannix and TransAKT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bannix Acquisition Corp and TransAKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAKT and Bannix 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 Bannix Acquisition Corp are associated (or correlated) with TransAKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAKT has no effect on the direction of Bannix Acquisition i.e., Bannix Acquisition and TransAKT go up and down completely randomly.

Pair Corralation between Bannix Acquisition and TransAKT

Given the investment horizon of 90 days Bannix Acquisition is expected to generate 8342.35 times less return on investment than TransAKT. But when comparing it to its historical volatility, Bannix Acquisition Corp is 510.25 times less risky than TransAKT. It trades about 0.01 of its potential returns per unit of risk. TransAKT is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.01  in TransAKT on September 3, 2024 and sell it today you would earn a total of  1.76  from holding TransAKT or generate 174.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Bannix Acquisition Corp  vs.  TransAKT

Bannix Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

TransAKT

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bannix Acquisition and TransAKT

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

The idea behind Bannix Acquisition Corp and TransAKT 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.