Correlation Between Plum Acquisition and Ziff Davis

Can any of the company-specific risk be diversified away by investing in both Plum Acquisition and Ziff Davis 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 Ziff Davis 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 Ziff Davis, you can compare the effects of market volatilities on Plum Acquisition and Ziff Davis 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 Ziff Davis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plum Acquisition and Ziff Davis.

Diversification Opportunities for Plum Acquisition and Ziff Davis

0.0

Correlation Coefficient

Plum Acquisition  Ziff Davis

Pay attention - limited upside

The 3 months correlation between Plum and Ziff is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Plum Acquisition Corp and Ziff Davis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ziff Davis 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 Ziff Davis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ziff Davis has no effect on the direction of Plum Acquisition i.e., Plum Acquisition and Ziff Davis go up and down completely randomly.

Pair Corralation between Plum Acquisition and Ziff Davis

Assuming the 90 days horizon Plum Acquisition Corp is expected to generate 1.96 times more return on investment than Ziff Davis. However, Plum Acquisition is 1.96 times more volatile than Ziff Davis. It trades about 0.29 of its potential returns per unit of risk. Ziff Davis is currently generating about -0.04 per unit of risk. If you would invest  1,100  in Plum Acquisition Corp on October 22, 2024 and sell it today you would earn a total of  165.00  from holding Plum Acquisition Corp or generate 15.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Plum Acquisition Corp  vs.  Ziff Davis

Plum Acquisition Corp

Risk-Adjusted Performance

12 of 100

Good

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

Ziff Davis

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plum Acquisition and Ziff Davis

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

The idea behind Plum Acquisition Corp and Ziff Davis 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..