Correlation Between Plum Acquisition and Blackstone

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

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

Diversification Opportunities for Plum Acquisition and Blackstone

0.87

Correlation Coefficient

Plum Acquisition  Blackstone

Very poor diversification

The 3 months correlation between Plum and Blackstone is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Plum Acquisition Corp and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and Plum Acquisition 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 Plum Acquisition Corp are associated (or correlated) with Blackstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Group has no effect on the direction of Plum Acquisition i.e., Plum Acquisition and Blackstone go up and down completely randomly.

Pair Corralation between Plum Acquisition and Blackstone

Given the investment horizon of 90 days Plum Acquisition is expected to generate 9.93 times less return on investment than Blackstone. But when comparing it to its historical volatility, Plum Acquisition Corp is 6.8 times less risky than Blackstone. It trades about 0.13 of its potential returns per unit of risk. Blackstone Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  15,425  in Blackstone Group on September 17, 2024 and sell it today you would earn a total of  3,420  from holding Blackstone Group or generate 22.17% return on investment over 90 days.

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

Plum Acquisition Corp  vs.  Blackstone Group

Plum Acquisition Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plum Acquisition Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady primary indicators, Plum Acquisition is not utilizing all of its potentials. The newest stock price chaos, may contribute to medium-term losses for the stakeholders.

Blackstone Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Blackstone showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plum Acquisition and Blackstone

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

The idea behind Plum Acquisition Corp and Blackstone Group 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.