Correlation Between Better World and Kingswood Acquisition

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

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

Diversification Opportunities for Better World and Kingswood Acquisition

0.0

Correlation Coefficient

Better World  Kingswood Acquisition

Pay attention - limited upside

The 3 months correlation between Better and Kingswood is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Better World Acquisition and Kingswood Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingswood Acquisition and Better World 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 Better World Acquisition are associated (or correlated) with Kingswood Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingswood Acquisition has no effect on the direction of Better World i.e., Better World and Kingswood Acquisition go up and down completely randomly.

Pair Corralation between Better World and Kingswood Acquisition

If you would invest (100.00) in Kingswood Acquisition Corp on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Kingswood Acquisition Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Better World Acquisition  vs.  Kingswood Acquisition Corp

Better World Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Better World Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Better World is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Kingswood Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kingswood Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Kingswood Acquisition is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Better World and Kingswood Acquisition

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

The idea behind Better World Acquisition and Kingswood 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.