Correlation Between Fortune Rise and ESH Acquisition

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

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

Diversification Opportunities for Fortune Rise and ESH Acquisition

-0.74

Correlation Coefficient

Fortune Rise  ESH Acquisition

Pay attention - limited upside

The 3 months correlation between Fortune and ESH is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Rise Acquisition and ESH Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESH Acquisition Corp and Fortune Rise 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 Fortune Rise Acquisition are associated (or correlated) with ESH Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESH Acquisition Corp has no effect on the direction of Fortune Rise i.e., Fortune Rise and ESH Acquisition go up and down completely randomly.

Pair Corralation between Fortune Rise and ESH Acquisition

Assuming the 90 days horizon Fortune Rise Acquisition is expected to generate 0.03 times more return on investment than ESH Acquisition. However, Fortune Rise Acquisition is 35.27 times less risky than ESH Acquisition. It trades about 0.17 of its potential returns per unit of risk. ESH Acquisition Corp is currently generating about 0.0 per unit of risk. If you would invest  1,126  in Fortune Rise Acquisition on September 4, 2024 and sell it today you would earn a total of  43.00  from holding Fortune Rise Acquisition or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	66.0%
Values	Daily Returns

Fortune Rise Acquisition  vs.  ESH Acquisition Corp

Fortune Rise Acquisition

Risk-Adjusted Performance

0 of 100

Good

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

ESH Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESH Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ESH Acquisition is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Fortune Rise and ESH Acquisition

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

The idea behind Fortune Rise Acquisition and ESH 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.