Correlation Between Broad Capital and Centurion Acquisition

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

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

Diversification Opportunities for Broad Capital and Centurion Acquisition

-0.32

Correlation Coefficient

Broad Capital  Centurion Acquisition

Very good diversification

The 3 months correlation between Broad and Centurion is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Centurion Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centurion Acquisition and Broad Capital 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 Broad Capital Acquisition are associated (or correlated) with Centurion Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centurion Acquisition has no effect on the direction of Broad Capital i.e., Broad Capital and Centurion Acquisition go up and down completely randomly.

Pair Corralation between Broad Capital and Centurion Acquisition

Assuming the 90 days horizon Broad Capital Acquisition is expected to generate 1.94 times more return on investment than Centurion Acquisition. However, Broad Capital is 1.94 times more volatile than Centurion Acquisition Corp. It trades about 0.2 of its potential returns per unit of risk. Centurion Acquisition Corp is currently generating about 0.12 per unit of risk. If you would invest  20.00  in Broad Capital Acquisition on September 17, 2024 and sell it today you would lose (3.11) from holding Broad Capital Acquisition or give up 15.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.52%
Values	Daily Returns

Broad Capital Acquisition  vs.  Centurion Acquisition Corp

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Broad Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental indicators, Broad Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Centurion Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centurion Acquisition Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Centurion Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broad Capital and Centurion Acquisition

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

The idea behind Broad Capital Acquisition and Centurion Acquisition Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.