Correlation Between Flag Ship and Centurion Acquisition

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

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

Diversification Opportunities for Flag Ship and Centurion Acquisition

0.29

Correlation Coefficient

Flag Ship  Centurion Acquisition

Modest diversification

The 3 months correlation between Flag and Centurion is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Flag Ship Acquisition and Centurion Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centurion Acquisition and Flag Ship 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 Flag Ship Acquisition are associated (or correlated) with Centurion Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centurion Acquisition has no effect on the direction of Flag Ship i.e., Flag Ship and Centurion Acquisition go up and down completely randomly.

Pair Corralation between Flag Ship and Centurion Acquisition

Assuming the 90 days horizon Flag Ship Acquisition is expected to under-perform the Centurion Acquisition. In addition to that, Flag Ship is 1.42 times more volatile than Centurion Acquisition Corp. It trades about -0.01 of its total potential returns per unit of risk. Centurion Acquisition Corp is currently generating about 0.19 per unit of volatility. If you would invest  1,010  in Centurion Acquisition Corp on December 28, 2024 and sell it today you would earn a total of  20.00  from holding Centurion Acquisition Corp or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Flag Ship Acquisition  vs.  Centurion Acquisition Corp

Flag Ship Acquisition

Risk-Adjusted Performance

Very Weak

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

Centurion Acquisition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centurion Acquisition Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Centurion Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Flag Ship and Centurion Acquisition

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

The idea behind Flag Ship Acquisition and Centurion 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.