Correlation Between BurTech Acquisition and Inception Growth

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

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

Diversification Opportunities for BurTech Acquisition and Inception Growth

-0.15

Correlation Coefficient

BurTech Acquisition  Inception Growth

Good diversification

The 3 months correlation between BurTech and Inception is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding BurTech Acquisition Corp and Inception Growth Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inception Growth Acq and BurTech 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 BurTech Acquisition Corp are associated (or correlated) with Inception Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inception Growth Acq has no effect on the direction of BurTech Acquisition i.e., BurTech Acquisition and Inception Growth go up and down completely randomly.

Pair Corralation between BurTech Acquisition and Inception Growth

Assuming the 90 days horizon BurTech Acquisition is expected to generate 6.6 times less return on investment than Inception Growth. But when comparing it to its historical volatility, BurTech Acquisition Corp is 2.51 times less risky than Inception Growth. It trades about 0.06 of its potential returns per unit of risk. Inception Growth Acquisition is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Inception Growth Acquisition on October 9, 2024 and sell it today you would lose (14.00) from holding Inception Growth Acquisition or give up 73.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.59%
Values	Daily Returns

BurTech Acquisition Corp  vs.  Inception Growth Acquisition

BurTech Acquisition Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days BurTech Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain technical indicators, BurTech Acquisition unveiled solid returns over the last few months and may actually be approaching a breakup point.

Inception Growth Acq

Risk-Adjusted Performance

0 of 100

Good

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

Pair Trading with BurTech Acquisition and Inception Growth

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

The idea behind BurTech Acquisition Corp and Inception Growth Acquisition 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.