Correlation Between Valuence Merger and Perception Capital

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

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

Diversification Opportunities for Valuence Merger and Perception Capital

0.33

Correlation Coefficient

Valuence Merger  Perception Capital

Weak diversification

The 3 months correlation between Valuence and Perception is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Valuence Merger Corp and Perception Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perception Capital Corp and Valuence Merger 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 Valuence Merger Corp are associated (or correlated) with Perception Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perception Capital Corp has no effect on the direction of Valuence Merger i.e., Valuence Merger and Perception Capital go up and down completely randomly.

Pair Corralation between Valuence Merger and Perception Capital

Given the investment horizon of 90 days Valuence Merger is expected to generate 385.23 times less return on investment than Perception Capital. But when comparing it to its historical volatility, Valuence Merger Corp is 317.27 times less risky than Perception Capital. It trades about 0.11 of its potential returns per unit of risk. Perception Capital Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.98  in Perception Capital Corp on September 16, 2024 and sell it today you would earn a total of  9.02  from holding Perception Capital Corp or generate 455.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	11.69%
Values	Daily Returns

Valuence Merger Corp  vs.  Perception Capital Corp

Valuence Merger Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valuence Merger Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Valuence Merger is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Perception Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perception Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Perception Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Valuence Merger and Perception Capital

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

The idea behind Valuence Merger Corp and Perception Capital 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.