Correlation Between Capitalworks Emerging and BurTech Acquisition

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

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

Diversification Opportunities for Capitalworks Emerging and BurTech Acquisition

0.03

Correlation Coefficient

Capitalworks Emerging  BurTech Acquisition

Significant diversification

The 3 months correlation between Capitalworks and BurTech is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Capitalworks Emerging Markets and BurTech Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BurTech Acquisition Corp and Capitalworks Emerging 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 Capitalworks Emerging Markets are associated (or correlated) with BurTech Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BurTech Acquisition Corp has no effect on the direction of Capitalworks Emerging i.e., Capitalworks Emerging and BurTech Acquisition go up and down completely randomly.

Pair Corralation between Capitalworks Emerging and BurTech Acquisition

If you would invest  1,151  in BurTech Acquisition Corp on September 18, 2024 and sell it today you would earn a total of  19.00  from holding BurTech Acquisition Corp or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Capitalworks Emerging Markets  vs.  BurTech Acquisition Corp

Capitalworks Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

BurTech Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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 stable technical indicators, BurTech Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Capitalworks Emerging and BurTech Acquisition

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

The idea behind Capitalworks Emerging Markets and BurTech 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.