Correlation Between APx Acquisition and BurTech Acquisition
Can any of the company-specific risk be diversified away by investing in both APx Acquisition and BurTech 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 APx Acquisition and BurTech Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APx Acquisition Corp and BurTech Acquisition Corp, you can compare the effects of market volatilities on APx Acquisition and BurTech 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 APx Acquisition with a short position of BurTech Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of APx Acquisition and BurTech Acquisition.
Diversification Opportunities for APx Acquisition and BurTech Acquisition
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between APx and BurTech is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding APx Acquisition Corp and BurTech Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BurTech Acquisition Corp and APx 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 APx Acquisition Corp are associated (or correlated) with BurTech Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BurTech Acquisition Corp has no effect on the direction of APx Acquisition i.e., APx Acquisition and BurTech Acquisition go up and down completely randomly.
Pair Corralation between APx Acquisition and BurTech Acquisition
Assuming the 90 days horizon APx Acquisition is expected to generate 223.27 times less return on investment than BurTech Acquisition. But when comparing it to its historical volatility, APx Acquisition Corp is 89.49 times less risky than BurTech Acquisition. It trades about 0.03 of its potential returns per unit of risk. BurTech Acquisition Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,063 in BurTech Acquisition Corp on November 5, 2024 and sell it today you would earn a total of 587.00 from holding BurTech Acquisition Corp or generate 55.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
APx Acquisition Corp vs. BurTech Acquisition Corp
Performance |
| Timeline |
| APx Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BurTech Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
APx Acquisition and BurTech Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APx Acquisition and BurTech Acquisition
The main advantage of trading using opposite APx Acquisition and BurTech Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APx Acquisition position performs unexpectedly, BurTech 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 BurTech Acquisition will offset losses from the drop in BurTech Acquisition's long position.The idea behind APx Acquisition Corp and BurTech 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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