Correlation Between DUET Acquisition and Centurion Acquisition

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

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

Diversification Opportunities for DUET Acquisition and Centurion Acquisition

0.61

Correlation Coefficient

DUET Acquisition  Centurion Acquisition

Poor diversification

The 3 months correlation between DUET and Centurion is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding DUET Acquisition Corp and Centurion Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centurion Acquisition and DUET 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 DUET Acquisition Corp are associated (or correlated) with Centurion Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centurion Acquisition has no effect on the direction of DUET Acquisition i.e., DUET Acquisition and Centurion Acquisition go up and down completely randomly.

Pair Corralation between DUET Acquisition and Centurion Acquisition

Given the investment horizon of 90 days DUET Acquisition Corp is expected to generate 0.0 times more return on investment than Centurion Acquisition. However, DUET Acquisition Corp is 371.34 times less risky than Centurion Acquisition. It trades about -0.33 of its potential returns per unit of risk. Centurion Acquisition Corp is currently generating about -0.22 per unit of risk. If you would invest  1,135  in DUET Acquisition Corp on September 17, 2024 and sell it today you would lose (2.00) from holding DUET Acquisition Corp or give up 0.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	42.86%
Values	Daily Returns

DUET Acquisition Corp  vs.  Centurion Acquisition Corp

DUET Acquisition Corp

Risk-Adjusted Performance

0 of 100

OK

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

Centurion Acquisition

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Centurion Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DUET Acquisition and Centurion Acquisition

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

The idea behind DUET Acquisition Corp and Centurion 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..