Correlation Between Consilium Acquisition and Investcorp Europe

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

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

Diversification Opportunities for Consilium Acquisition and Investcorp Europe

-0.41

Correlation Coefficient

Consilium Acquisition  Investcorp Europe

Very good diversification

The 3 months correlation between Consilium and Investcorp is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Consilium Acquisition I and Investcorp Europe Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Europe and Consilium Acquisition 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 Consilium Acquisition I are associated (or correlated) with Investcorp Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Europe has no effect on the direction of Consilium Acquisition i.e., Consilium Acquisition and Investcorp Europe go up and down completely randomly.

Pair Corralation between Consilium Acquisition and Investcorp Europe

Given the investment horizon of 90 days Consilium Acquisition is expected to generate 5.56 times less return on investment than Investcorp Europe. In addition to that, Consilium Acquisition is 3.98 times more volatile than Investcorp Europe Acquisition. It trades about 0.01 of its total potential returns per unit of risk. Investcorp Europe Acquisition is currently generating about 0.21 per unit of volatility. If you would invest  1,051  in Investcorp Europe Acquisition on December 5, 2024 and sell it today you would earn a total of  18.00  from holding Investcorp Europe Acquisition or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Consilium Acquisition I  vs.  Investcorp Europe Acquisition

Consilium Acquisition

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Consilium Acquisition I are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Consilium Acquisition is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Investcorp Europe

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investcorp Europe Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Investcorp Europe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Consilium Acquisition and Investcorp Europe

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

The idea behind Consilium Acquisition I and Investcorp Europe Acquisition 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.