Correlation Between Valuence Merger and Kingswood Acquisition

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

Diversification Opportunities for Valuence Merger and Kingswood Acquisition

-0.08

Correlation Coefficient

Valuence Merger  Kingswood Acquisition

Good diversification

The 3 months correlation between Valuence and Kingswood is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Valuence Merger Corp and Kingswood Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingswood Acquisition 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 Kingswood Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingswood Acquisition has no effect on the direction of Valuence Merger i.e., Valuence Merger and Kingswood Acquisition go up and down completely randomly.

Pair Corralation between Valuence Merger and Kingswood Acquisition

If you would invest  3.20  in Valuence Merger Corp on October 12, 2024 and sell it today you would earn a total of  2.20  from holding Valuence Merger Corp or generate 68.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	3.85%
Values	Daily Returns

Valuence Merger Corp  vs.  Kingswood Acquisition Corp

Valuence Merger Corp

Risk-Adjusted Performance

14 of 100

Good

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.

Kingswood Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Valuence Merger and Kingswood Acquisition

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

The idea behind Valuence Merger Corp and Kingswood 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.