Correlation Between Finnovate Acquisition and Healthcare

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

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

Diversification Opportunities for Finnovate Acquisition and Healthcare

-0.23

Correlation Coefficient

Finnovate Acquisition  Healthcare

Very good diversification

The 3 months correlation between Finnovate and Healthcare is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Finnovate Acquisition Corp and Healthcare AI Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare AI Acquisition and Finnovate 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 Finnovate Acquisition Corp are associated (or correlated) with Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare AI Acquisition has no effect on the direction of Finnovate Acquisition i.e., Finnovate Acquisition and Healthcare go up and down completely randomly.

Pair Corralation between Finnovate Acquisition and Healthcare

Given the investment horizon of 90 days Finnovate Acquisition is expected to generate 6.54 times less return on investment than Healthcare. But when comparing it to its historical volatility, Finnovate Acquisition Corp is 2.18 times less risky than Healthcare. It trades about 0.04 of its potential returns per unit of risk. Healthcare AI Acquisition is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,124  in Healthcare AI Acquisition on September 13, 2024 and sell it today you would earn a total of  26.00  from holding Healthcare AI Acquisition or generate 2.31% return on investment over 90 days.

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

Finnovate Acquisition Corp  vs.  Healthcare AI Acquisition

Finnovate Acquisition

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Finnovate Acquisition Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Finnovate Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Healthcare AI Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Finnovate Acquisition and Healthcare

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

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