Correlation Between Black Spade and Carlyle

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

By analyzing existing cross correlation between Black Spade Acquisition and The Carlyle Group, you can compare the effects of market volatilities on Black Spade and Carlyle 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 Black Spade with a short position of Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Spade and Carlyle.

Diversification Opportunities for Black Spade and Carlyle

-0.18

Correlation Coefficient

Black Spade  Carlyle

Good diversification

The 3 months correlation between Black and Carlyle is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Black Spade Acquisition and The Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and Black Spade 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 Black Spade Acquisition are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Black Spade i.e., Black Spade and Carlyle go up and down completely randomly.

Pair Corralation between Black Spade and Carlyle

Assuming the 90 days horizon Black Spade is expected to generate 3.94 times less return on investment than Carlyle. But when comparing it to its historical volatility, Black Spade Acquisition is 4.95 times less risky than Carlyle. It trades about 0.04 of its potential returns per unit of risk. The Carlyle Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,488  in The Carlyle Group on December 8, 2024 and sell it today you would earn a total of  286.00  from holding The Carlyle Group or generate 19.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.52%
Values	Daily Returns

Black Spade Acquisition  vs.  The Carlyle Group

Black Spade Acquisition

Risk-Adjusted Performance

Very Weak

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

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Carlyle is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Black Spade and Carlyle

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

The idea behind Black Spade Acquisition and The Carlyle Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.