Correlation Between TLGY Acquisition and LAVA Medtech

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

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

Diversification Opportunities for TLGY Acquisition and LAVA Medtech

0.8

Correlation Coefficient

TLGY Acquisition  LAVA Medtech

Very poor diversification

The 3 months correlation between TLGY and LAVA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding TLGY Acquisition Corp and LAVA Medtech Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAVA Medtech Acquisition and TLGY 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 TLGY Acquisition Corp are associated (or correlated) with LAVA Medtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAVA Medtech Acquisition has no effect on the direction of TLGY Acquisition i.e., TLGY Acquisition and LAVA Medtech go up and down completely randomly.

Pair Corralation between TLGY Acquisition and LAVA Medtech

If you would invest  1,149  in TLGY Acquisition Corp on September 15, 2024 and sell it today you would earn a total of  15.00  from holding TLGY Acquisition Corp or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.54%
Values	Daily Returns

TLGY Acquisition Corp  vs.  LAVA Medtech Acquisition

TLGY Acquisition Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TLGY Acquisition Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, TLGY Acquisition is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

LAVA Medtech Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TLGY Acquisition and LAVA Medtech

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

The idea behind TLGY Acquisition Corp and LAVA Medtech 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.