Correlation Between Investcorp Europe and Broad Capital

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

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

Diversification Opportunities for Investcorp Europe and Broad Capital

-0.46

Correlation Coefficient

Investcorp Europe  Broad Capital

Very good diversification

The 3 months correlation between Investcorp and Broad is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Investcorp Europe Acquisition and Broad Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broad Capital Acquisition and Investcorp Europe 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 Investcorp Europe Acquisition are associated (or correlated) with Broad Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broad Capital Acquisition has no effect on the direction of Investcorp Europe i.e., Investcorp Europe and Broad Capital go up and down completely randomly.

Pair Corralation between Investcorp Europe and Broad Capital

Given the investment horizon of 90 days Investcorp Europe Acquisition is expected to generate 2.45 times more return on investment than Broad Capital. However, Investcorp Europe is 2.45 times more volatile than Broad Capital Acquisition. It trades about 0.21 of its potential returns per unit of risk. Broad Capital Acquisition is currently generating about -0.04 per unit of risk. If you would invest  1,090  in Investcorp Europe Acquisition on September 18, 2024 and sell it today you would earn a total of  74.00  from holding Investcorp Europe Acquisition or generate 6.79% return on investment over 90 days.

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

Investcorp Europe Acquisition  vs.  Broad Capital Acquisition

Investcorp Europe

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Europe Acquisition are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Investcorp Europe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Investcorp Europe and Broad Capital

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

The idea behind Investcorp Europe Acquisition and Broad Capital 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.