Correlation Between Broad Capital and Aura FAT
Can any of the company-specific risk be diversified away by investing in both Broad Capital and Aura FAT 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 Broad Capital and Aura FAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broad Capital Acquisition and Aura FAT Projects, you can compare the effects of market volatilities on Broad Capital and Aura FAT 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 Broad Capital with a short position of Aura FAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broad Capital and Aura FAT.
Diversification Opportunities for Broad Capital and Aura FAT
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Broad and Aura is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Aura FAT Projects in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura FAT Projects and Broad Capital 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 Broad Capital Acquisition are associated (or correlated) with Aura FAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura FAT Projects has no effect on the direction of Broad Capital i.e., Broad Capital and Aura FAT go up and down completely randomly.
Pair Corralation between Broad Capital and Aura FAT
Assuming the 90 days horizon Broad Capital is expected to generate 4.69 times less return on investment than Aura FAT. But when comparing it to its historical volatility, Broad Capital Acquisition is 1.88 times less risky than Aura FAT. It trades about 0.02 of its potential returns per unit of risk. Aura FAT Projects is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Aura FAT Projects on September 2, 2024 and sell it today you would earn a total of 214.00 from holding Aura FAT Projects or generate 20.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.68% |
| Values | Daily Returns |
Broad Capital Acquisition vs. Aura FAT Projects
Performance |
| Timeline |
| Broad Capital Acquisition |
| Aura FAT Projects |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Broad Capital and Aura FAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broad Capital and Aura FAT
The main advantage of trading using opposite Broad Capital and Aura FAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broad Capital position performs unexpectedly, Aura FAT 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 Aura FAT will offset losses from the drop in Aura FAT's long position.| Broad Capital vs. Visa Class A | Broad Capital vs. Diamond Hill Investment | Broad Capital vs. Distoken Acquisition | Broad Capital vs. Associated Capital Group |
| Aura FAT vs. Embrace Change Acquisition | Aura FAT vs. Denali Capital Acquisition | Aura FAT vs. Aimfinity Investment I |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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