Correlation Between Launch One and Jaws Mustang

Can any of the company-specific risk be diversified away by investing in both Launch One and Jaws Mustang 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 Launch One and Jaws Mustang into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Launch One and Jaws Mustang

0.17

Correlation Coefficient

Launch One  Jaws Mustang

Average diversification

The 3 months correlation between Launch and Jaws is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Launch One Acquisition and Jaws Mustang Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaws Mustang Acquisition and Launch One 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 Launch One Acquisition are associated (or correlated) with Jaws Mustang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaws Mustang Acquisition has no effect on the direction of Launch One i.e., Launch One and Jaws Mustang go up and down completely randomly.

Pair Corralation between Launch One and Jaws Mustang

If you would invest  8.00  in Launch One Acquisition on October 11, 2024 and sell it today you would earn a total of  7.00  from holding Launch One Acquisition or generate 87.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	6.9%
Values	Daily Returns

Launch One Acquisition  vs.  Jaws Mustang Acquisition

Launch One Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Launch One Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Launch One showed solid returns over the last few months and may actually be approaching a breakup point.

Jaws Mustang Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaws Mustang Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jaws Mustang is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Launch One and Jaws Mustang

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

The idea behind Launch One Acquisition and Jaws Mustang 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.