Correlation Between BioPlus Acquisition and Kernel Group
Can any of the company-specific risk be diversified away by investing in both BioPlus Acquisition and Kernel Group 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 BioPlus Acquisition and Kernel Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioPlus Acquisition Corp and Kernel Group Holdings, you can compare the effects of market volatilities on BioPlus Acquisition and Kernel Group 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 BioPlus Acquisition with a short position of Kernel Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioPlus Acquisition and Kernel Group.
Diversification Opportunities for BioPlus Acquisition and Kernel Group
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between BioPlus and Kernel is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding BioPlus Acquisition Corp and Kernel Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kernel Group Holdings and BioPlus 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 BioPlus Acquisition Corp are associated (or correlated) with Kernel Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kernel Group Holdings has no effect on the direction of BioPlus Acquisition i.e., BioPlus Acquisition and Kernel Group go up and down completely randomly.
Pair Corralation between BioPlus Acquisition and Kernel Group
Assuming the 90 days horizon BioPlus Acquisition Corp is expected to generate 10.91 times more return on investment than Kernel Group. However, BioPlus Acquisition is 10.91 times more volatile than Kernel Group Holdings. It trades about 0.19 of its potential returns per unit of risk. Kernel Group Holdings is currently generating about 0.0 per unit of risk. If you would invest 9.32 in BioPlus Acquisition Corp on August 30, 2024 and sell it today you would earn a total of 4.68 from holding BioPlus Acquisition Corp or generate 50.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 9.52% |
| Values | Daily Returns |
BioPlus Acquisition Corp vs. Kernel Group Holdings
Performance |
| Timeline |
| BioPlus Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kernel Group Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BioPlus Acquisition and Kernel Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioPlus Acquisition and Kernel Group
The main advantage of trading using opposite BioPlus Acquisition and Kernel Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioPlus Acquisition position performs unexpectedly, Kernel Group 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 Kernel Group will offset losses from the drop in Kernel Group's long position.The idea behind BioPlus Acquisition Corp and Kernel Group Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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