Correlation Between Technology Telecommunicatio and Plum Acquisition

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

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

Diversification Opportunities for Technology Telecommunicatio and Plum Acquisition

-0.09

Correlation Coefficient

Technology Telecommunicatio  Plum Acquisition

Good diversification

The 3 months correlation between Technology and Plum is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Technology Telecommunication A and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp and Technology Telecommunicatio 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 Technology Telecommunication Acquisition are associated (or correlated) with Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of Technology Telecommunicatio i.e., Technology Telecommunicatio and Plum Acquisition go up and down completely randomly.

Pair Corralation between Technology Telecommunicatio and Plum Acquisition

Assuming the 90 days horizon Technology Telecommunication Acquisition is expected to generate 115.52 times more return on investment than Plum Acquisition. However, Technology Telecommunicatio is 115.52 times more volatile than Plum Acquisition Corp. It trades about 0.07 of its potential returns per unit of risk. Plum Acquisition Corp is currently generating about 0.15 per unit of risk. If you would invest  2.61  in Technology Telecommunication Acquisition on October 7, 2024 and sell it today you would lose (1.43) from holding Technology Telecommunication Acquisition or give up 54.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.32%
Values	Daily Returns

Technology Telecommunication A  vs.  Plum Acquisition Corp

Technology Telecommunicatio

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Telecommunication Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Technology Telecommunicatio showed solid returns over the last few months and may actually be approaching a breakup point.

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. Even with relatively steady primary indicators, Plum Acquisition is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Technology Telecommunicatio and Plum Acquisition

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

The idea behind Technology Telecommunication Acquisition and Plum Acquisition Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.