Correlation Between TRON and AIB Acquisition

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

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

Diversification Opportunities for TRON and AIB Acquisition

0.0

Correlation Coefficient

TRON  AIB Acquisition

Pay attention - limited upside

The 3 months correlation between TRON and AIB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TRON and AIB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Acquisition Corp and TRON 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 TRON are associated (or correlated) with AIB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Acquisition Corp has no effect on the direction of TRON i.e., TRON and AIB Acquisition go up and down completely randomly.

Pair Corralation between TRON and AIB Acquisition

Assuming the 90 days trading horizon TRON is expected to generate 23.69 times more return on investment than AIB Acquisition. However, TRON is 23.69 times more volatile than AIB Acquisition Corp. It trades about 0.09 of its potential returns per unit of risk. AIB Acquisition Corp is currently generating about 0.14 per unit of risk. If you would invest  6.27  in TRON on October 10, 2024 and sell it today you would earn a total of  18.73  from holding TRON or generate 298.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	43.1%
Values	Daily Returns

TRON  vs.  AIB Acquisition Corp

TRON

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

AIB Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TRON and AIB Acquisition

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

The idea behind TRON and AIB 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.