Correlation Between Edoc Acquisition and AGBA Acquisition
Can any of the company-specific risk be diversified away by investing in both Edoc Acquisition and AGBA 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 Edoc Acquisition and AGBA Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edoc Acquisition Corp and AGBA Acquisition Limited, you can compare the effects of market volatilities on Edoc Acquisition and AGBA 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 Edoc Acquisition with a short position of AGBA Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edoc Acquisition and AGBA Acquisition.
Diversification Opportunities for Edoc Acquisition and AGBA Acquisition
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Edoc and AGBA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Edoc Acquisition Corp and AGBA Acquisition Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGBA Acquisition and Edoc 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 Edoc Acquisition Corp are associated (or correlated) with AGBA Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGBA Acquisition has no effect on the direction of Edoc Acquisition i.e., Edoc Acquisition and AGBA Acquisition go up and down completely randomly.
Pair Corralation between Edoc Acquisition and AGBA Acquisition
Assuming the 90 days horizon Edoc Acquisition is expected to generate 2.24 times less return on investment than AGBA Acquisition. But when comparing it to its historical volatility, Edoc Acquisition Corp is 3.11 times less risky than AGBA Acquisition. It trades about 0.16 of its potential returns per unit of risk. AGBA Acquisition Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6.62 in AGBA Acquisition Limited on August 30, 2024 and sell it today you would earn a total of 14.38 from holding AGBA Acquisition Limited or generate 217.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 10.51% |
| Values | Daily Returns |
Edoc Acquisition Corp vs. AGBA Acquisition Limited
Performance |
| Timeline |
| Edoc Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AGBA Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Edoc Acquisition and AGBA Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edoc Acquisition and AGBA Acquisition
The main advantage of trading using opposite Edoc Acquisition and AGBA Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edoc Acquisition position performs unexpectedly, AGBA 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 AGBA Acquisition will offset losses from the drop in AGBA Acquisition's long position.The idea behind Edoc Acquisition Corp and AGBA Acquisition Limited 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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