Correlation Between Roma Green and Black Spade

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

By analyzing existing cross correlation between Roma Green Finance and Black Spade Acquisition, you can compare the effects of market volatilities on Roma Green and Black Spade 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 Roma Green with a short position of Black Spade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roma Green and Black Spade.

Diversification Opportunities for Roma Green and Black Spade

0.02

Correlation Coefficient

Roma Green  Black Spade

Significant diversification

The 3 months correlation between Roma and Black is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Roma Green Finance and Black Spade Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Spade Acquisition and Roma Green 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 Roma Green Finance are associated (or correlated) with Black Spade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Spade Acquisition has no effect on the direction of Roma Green i.e., Roma Green and Black Spade go up and down completely randomly.

Pair Corralation between Roma Green and Black Spade

Given the investment horizon of 90 days Roma Green Finance is expected to generate 25.83 times more return on investment than Black Spade. However, Roma Green is 25.83 times more volatile than Black Spade Acquisition. It trades about 0.05 of its potential returns per unit of risk. Black Spade Acquisition is currently generating about 0.01 per unit of risk. If you would invest  76.00  in Roma Green Finance on December 19, 2024 and sell it today you would earn a total of  4.00  from holding Roma Green Finance or generate 5.26% return on investment over 90 days.

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

Roma Green Finance  vs.  Black Spade Acquisition

Roma Green Finance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Roma Green Finance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady primary indicators, Roma Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Black Spade Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Black Spade Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Black Spade is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Roma Green and Black Spade

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

The idea behind Roma Green Finance and Black Spade 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.