Correlation Between Forbion European and BurTech Acquisition

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

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

Diversification Opportunities for Forbion European and BurTech Acquisition

0.75

Correlation Coefficient

Forbion European  BurTech Acquisition

Poor diversification

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

Pair Corralation between Forbion European and BurTech Acquisition

If you would invest  17.00  in BurTech Acquisition Corp on October 22, 2024 and sell it today you would earn a total of  15.00  from holding BurTech Acquisition Corp or generate 88.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	3.85%
Values	Daily Returns

Forbion European Acquisition  vs.  BurTech Acquisition Corp

Forbion European Acq

Risk-Adjusted Performance

0 of 100

Very Weak

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

BurTech Acquisition Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days BurTech Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal technical indicators, BurTech Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forbion European and BurTech Acquisition

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

The idea behind Forbion European Acquisition and BurTech 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.