Correlation Between PowerUp Acquisition and Stepstone

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

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

Diversification Opportunities for PowerUp Acquisition and Stepstone

-0.43

Correlation Coefficient

PowerUp Acquisition  Stepstone

Very good diversification

The 3 months correlation between PowerUp and Stepstone is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PowerUp Acquisition Corp and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and PowerUp 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 PowerUp Acquisition Corp are associated (or correlated) with Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of PowerUp Acquisition i.e., PowerUp Acquisition and Stepstone go up and down completely randomly.

Pair Corralation between PowerUp Acquisition and Stepstone

Assuming the 90 days horizon PowerUp Acquisition Corp is expected to generate 46.1 times more return on investment than Stepstone. However, PowerUp Acquisition is 46.1 times more volatile than Stepstone Group. It trades about 0.11 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.09 per unit of risk. If you would invest  6.81  in PowerUp Acquisition Corp on October 26, 2024 and sell it today you would lose (1.61) from holding PowerUp Acquisition Corp or give up 23.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.56%
Values	Daily Returns

PowerUp Acquisition Corp  vs.  Stepstone Group

PowerUp Acquisition Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PowerUp Acquisition Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PowerUp Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Stepstone Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Stepstone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PowerUp Acquisition and Stepstone

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

The idea behind PowerUp Acquisition Corp and Stepstone 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.