Correlation Between Broad Capital and Mars Acquisition

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

Diversification Opportunities for Broad Capital and Mars Acquisition

0.2

Correlation Coefficient

Broad Capital  Mars Acquisition

Modest diversification

The 3 months correlation between Broad and Mars is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars 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 Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Broad Capital i.e., Broad Capital and Mars Acquisition go up and down completely randomly.

Pair Corralation between Broad Capital and Mars Acquisition

Assuming the 90 days horizon Broad Capital is expected to generate 108.82 times less return on investment than Mars Acquisition. But when comparing it to its historical volatility, Broad Capital Acquisition is 74.39 times less risky than Mars Acquisition. It trades about 0.03 of its potential returns per unit of risk. Mars Acquisition Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Mars Acquisition Corp on September 26, 2024 and sell it today you would earn a total of  564.00  from holding Mars Acquisition Corp or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.13%
Values	Daily Returns

Broad Capital Acquisition  vs.  Mars Acquisition Corp

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mars Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mars Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Broad Capital and Mars Acquisition

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

The idea behind Broad Capital Acquisition and Mars 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 Transaction History module to view history of all your transactions and understand their impact on performance.