Correlation Between Valuence Merger and Graf Acquisition

Can any of the company-specific risk be diversified away by investing in both Valuence Merger and Graf 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 Valuence Merger and Graf Acquisition 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 Graf Acquisition Corp, you can compare the effects of market volatilities on Valuence Merger and Graf 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 Valuence Merger with a short position of Graf Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valuence Merger and Graf Acquisition.

Diversification Opportunities for Valuence Merger and Graf Acquisition

0.24

Correlation Coefficient

Valuence Merger  Graf Acquisition

Modest diversification

The 3 months correlation between Valuence and Graf is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Valuence Merger Corp and Graf Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graf Acquisition 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 Graf Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graf Acquisition Corp has no effect on the direction of Valuence Merger i.e., Valuence Merger and Graf Acquisition go up and down completely randomly.

Pair Corralation between Valuence Merger and Graf Acquisition

Assuming the 90 days horizon Valuence Merger Corp is expected to generate 358.14 times more return on investment than Graf Acquisition. However, Valuence Merger is 358.14 times more volatile than Graf Acquisition Corp. It trades about 0.13 of its potential returns per unit of risk. Graf Acquisition Corp is currently generating about 0.09 per unit of risk. If you would invest  6.01  in Valuence Merger Corp on October 10, 2024 and sell it today you would lose (0.61) from holding Valuence Merger Corp or give up 10.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	59.45%
Values	Daily Returns

Valuence Merger Corp  vs.  Graf Acquisition Corp

Valuence Merger Corp

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valuence Merger Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Valuence Merger showed solid returns over the last few months and may actually be approaching a breakup point.

Graf Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graf Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Graf Acquisition is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Valuence Merger and Graf Acquisition

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

The idea behind Valuence Merger Corp and Graf 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.