Correlation Between Global Lights and Insight Acquisition

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

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

Diversification Opportunities for Global Lights and Insight Acquisition

-0.34

Correlation Coefficient

Global Lights  Insight Acquisition

Very good diversification

The 3 months correlation between Global and Insight is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Global Lights Acquisition and Insight Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insight Acquisition Corp and Global Lights 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 Global Lights Acquisition are associated (or correlated) with Insight Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insight Acquisition Corp has no effect on the direction of Global Lights i.e., Global Lights and Insight Acquisition go up and down completely randomly.

Pair Corralation between Global Lights and Insight Acquisition

Assuming the 90 days horizon Global Lights Acquisition is expected to generate 0.02 times more return on investment than Insight Acquisition. However, Global Lights Acquisition is 51.35 times less risky than Insight Acquisition. It trades about 0.16 of its potential returns per unit of risk. Insight Acquisition Corp is currently generating about -0.02 per unit of risk. If you would invest  1,060  in Global Lights Acquisition on October 9, 2024 and sell it today you would earn a total of  15.00  from holding Global Lights Acquisition or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.69%
Values	Daily Returns

Global Lights Acquisition  vs.  Insight Acquisition Corp

Global Lights Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Lights Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Global Lights is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Insight Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insight Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Global Lights and Insight Acquisition

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

The idea behind Global Lights Acquisition and Insight 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.