Correlation Between Broad Capital and Plum Acquisition

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

Diversification Opportunities for Broad Capital and Plum Acquisition

-0.4

Correlation Coefficient

Broad Capital  Plum Acquisition

Very good diversification

The 3 months correlation between Broad and Plum is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum 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 Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of Broad Capital i.e., Broad Capital and Plum Acquisition go up and down completely randomly.

Pair Corralation between Broad Capital and Plum Acquisition

Assuming the 90 days horizon Broad Capital Acquisition is expected to under-perform the Plum Acquisition. In addition to that, Broad Capital is 3.81 times more volatile than Plum Acquisition Corp. It trades about -0.01 of its total potential returns per unit of risk. Plum Acquisition Corp is currently generating about 0.12 per unit of volatility. If you would invest  1,080  in Plum Acquisition Corp on October 7, 2024 and sell it today you would earn a total of  35.00  from holding Plum Acquisition Corp or generate 3.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Broad Capital Acquisition  vs.  Plum 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Plum Acquisition Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plum Acquisition Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady primary indicators, Plum Acquisition is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Broad Capital and Plum Acquisition

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

The idea behind Broad Capital Acquisition and Plum 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.