Correlation Between Broad Capital and Oaktree Acquisition

Can any of the company-specific risk be diversified away by investing in both Broad Capital and Oaktree 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 Oaktree 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 Oaktree Acquisition Corp, you can compare the effects of market volatilities on Broad Capital and Oaktree 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 Oaktree Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broad Capital and Oaktree Acquisition.

Diversification Opportunities for Broad Capital and Oaktree Acquisition

0.61

Correlation Coefficient

Broad Capital  Oaktree Acquisition

Poor diversification

The 3 months correlation between Broad and Oaktree is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Oaktree Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Acquisition Corp 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 Oaktree Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Acquisition Corp has no effect on the direction of Broad Capital i.e., Broad Capital and Oaktree Acquisition go up and down completely randomly.

Pair Corralation between Broad Capital and Oaktree Acquisition

Assuming the 90 days horizon Broad Capital Acquisition is expected to generate 33.94 times more return on investment than Oaktree Acquisition. However, Broad Capital is 33.94 times more volatile than Oaktree Acquisition Corp. It trades about 0.14 of its potential returns per unit of risk. Oaktree Acquisition Corp is currently generating about 0.07 per unit of risk. If you would invest  13.00  in Broad Capital Acquisition on September 21, 2024 and sell it today you would earn a total of  2.00  from holding Broad Capital Acquisition or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	30.0%
Values	Daily Returns

Broad Capital Acquisition  vs.  Oaktree Acquisition Corp

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Insignificant

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.

Oaktree Acquisition Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oaktree Acquisition Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Oaktree Acquisition 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 Broad Capital and Oaktree Acquisition

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

The idea behind Broad Capital Acquisition and Oaktree 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.