Correlation Between YHN Acquisition and Bayview Acquisition

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

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

Diversification Opportunities for YHN Acquisition and Bayview Acquisition

-0.48

Correlation Coefficient

YHN Acquisition  Bayview Acquisition

Very good diversification

The 3 months correlation between YHN and Bayview is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding YHN Acquisition I and Bayview Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayview Acquisition Corp and YHN 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 YHN Acquisition I are associated (or correlated) with Bayview Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayview Acquisition Corp has no effect on the direction of YHN Acquisition i.e., YHN Acquisition and Bayview Acquisition go up and down completely randomly.

Pair Corralation between YHN Acquisition and Bayview Acquisition

Assuming the 90 days horizon YHN Acquisition is expected to generate 1.34 times less return on investment than Bayview Acquisition. In addition to that, YHN Acquisition is 1.59 times more volatile than Bayview Acquisition Corp. It trades about 0.07 of its total potential returns per unit of risk. Bayview Acquisition Corp is currently generating about 0.16 per unit of volatility. If you would invest  15.00  in Bayview Acquisition Corp on December 28, 2024 and sell it today you would earn a total of  6.00  from holding Bayview Acquisition Corp or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	69.77%
Values	Daily Returns

YHN Acquisition I  vs.  Bayview Acquisition Corp

YHN Acquisition I

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in YHN Acquisition I are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, YHN Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Bayview Acquisition Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bayview Acquisition Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Bayview Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YHN Acquisition and Bayview Acquisition

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

The idea behind YHN Acquisition I and Bayview 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.