Correlation Between Eureka Acquisition and Carlyle

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

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

Diversification Opportunities for Eureka Acquisition and Carlyle

-0.75

Correlation Coefficient

Eureka Acquisition  Carlyle

Pay attention - limited upside

The 3 months correlation between Eureka and Carlyle is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eureka Acquisition Corp and The Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and Eureka 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 Eureka Acquisition Corp are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Eureka Acquisition i.e., Eureka Acquisition and Carlyle go up and down completely randomly.

Pair Corralation between Eureka Acquisition and Carlyle

Given the investment horizon of 90 days Eureka Acquisition Corp is expected to generate 0.06 times more return on investment than Carlyle. However, Eureka Acquisition Corp is 15.42 times less risky than Carlyle. It trades about 0.22 of its potential returns per unit of risk. The Carlyle Group is currently generating about -0.3 per unit of risk. If you would invest  1,011  in Eureka Acquisition Corp on September 24, 2024 and sell it today you would earn a total of  3.00  from holding Eureka Acquisition Corp or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Eureka Acquisition Corp  vs.  The Carlyle Group

Eureka Acquisition Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Acquisition Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eureka Acquisition is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Eureka Acquisition and Carlyle

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

The idea behind Eureka Acquisition Corp and The Carlyle Group 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..