Correlation Between Blue World and Pono Capital

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

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

Diversification Opportunities for Blue World and Pono Capital

0.6

Correlation Coefficient

Blue World  Pono Capital

Poor diversification

The 3 months correlation between Blue and Pono is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Blue World Acquisition and Pono Capital Two in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pono Capital Two and Blue 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 Blue World Acquisition are associated (or correlated) with Pono Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pono Capital Two has no effect on the direction of Blue World i.e., Blue World and Pono Capital go up and down completely randomly.

Pair Corralation between Blue World and Pono Capital

If you would invest  1,005  in Pono Capital Two on September 7, 2024 and sell it today you would earn a total of  195.00  from holding Pono Capital Two or generate 19.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	12.5%
Values	Daily Returns

Blue World Acquisition  vs.  Pono Capital Two

Blue World Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue World Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Blue World is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pono Capital Two

Risk-Adjusted Performance

0 of 100

Excellent

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

Pair Trading with Blue World and Pono Capital

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

The idea behind Blue World Acquisition and Pono Capital Two 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.