Correlation Between Forum Merger and Investcorp Europe

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

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

Diversification Opportunities for Forum Merger and Investcorp Europe

0.0

Correlation Coefficient

Forum Merger  Investcorp Europe

Pay attention - limited upside

The 3 months correlation between Forum and Investcorp is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Forum Merger IV and Investcorp Europe Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Europe and Forum Merger 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 Forum Merger IV 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 Forum Merger i.e., Forum Merger and Investcorp Europe go up and down completely randomly.

Pair Corralation between Forum Merger and Investcorp Europe

If you would invest  1,051  in Investcorp Europe Acquisition on December 28, 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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Forum Merger IV  vs.  Investcorp Europe Acquisition

Forum Merger IV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forum Merger IV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Forum Merger is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Investcorp Europe

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Europe Acquisition are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. 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 Forum Merger and Investcorp Europe

The main advantage of trading using opposite Forum Merger and Investcorp Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Merger 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 Forum Merger IV 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.