Correlation Between BTU Metals and PowerUp Acquisition

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

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

Diversification Opportunities for BTU Metals and PowerUp Acquisition

0.04

Correlation Coefficient

BTU Metals  PowerUp Acquisition

Significant diversification

The 3 months correlation between BTU and PowerUp is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and PowerUp Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerUp Acquisition Corp and BTU Metals 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 BTU Metals Corp are associated (or correlated) with PowerUp Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerUp Acquisition Corp has no effect on the direction of BTU Metals i.e., BTU Metals and PowerUp Acquisition go up and down completely randomly.

Pair Corralation between BTU Metals and PowerUp Acquisition

Assuming the 90 days horizon BTU Metals Corp is expected to generate 4.47 times more return on investment than PowerUp Acquisition. However, BTU Metals is 4.47 times more volatile than PowerUp Acquisition Corp. It trades about 0.03 of its potential returns per unit of risk. PowerUp Acquisition Corp is currently generating about 0.02 per unit of risk. If you would invest  2.73  in BTU Metals Corp on October 7, 2024 and sell it today you would lose (0.73) from holding BTU Metals Corp or give up 26.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

BTU Metals Corp  vs.  PowerUp Acquisition Corp

BTU Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BTU Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, BTU Metals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

PowerUp Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BTU Metals and PowerUp Acquisition

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

The idea behind BTU Metals Corp and PowerUp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.