Correlation Between Revelstone Capital and A SPAC

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

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

Diversification Opportunities for Revelstone Capital and A SPAC

0.72

Correlation Coefficient

Revelstone Capital  A SPAC

Poor diversification

The 3 months correlation between Revelstone and ASCA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Revelstone Capital Acquisition and A SPAC I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A SPAC I and Revelstone Capital 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 Revelstone Capital Acquisition are associated (or correlated) with A SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A SPAC I has no effect on the direction of Revelstone Capital i.e., Revelstone Capital and A SPAC go up and down completely randomly.

Pair Corralation between Revelstone Capital and A SPAC

Given the investment horizon of 90 days Revelstone Capital is expected to generate 1.05 times less return on investment than A SPAC. But when comparing it to its historical volatility, Revelstone Capital Acquisition is 2.93 times less risky than A SPAC. It trades about 0.18 of its potential returns per unit of risk. A SPAC I is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,020  in A SPAC I on September 19, 2024 and sell it today you would earn a total of  41.00  from holding A SPAC I or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.3%
Values	Daily Returns

Revelstone Capital Acquisition  vs.  A SPAC I

Revelstone Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revelstone Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Revelstone Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

A SPAC I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A SPAC I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, A SPAC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Revelstone Capital and A SPAC

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

The idea behind Revelstone Capital Acquisition and A SPAC I 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..