Correlation Between Chain Bridge and Forbion European
Can any of the company-specific risk be diversified away by investing in both Chain Bridge and Forbion European 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 Chain Bridge and Forbion European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chain Bridge I and Forbion European Acquisition, you can compare the effects of market volatilities on Chain Bridge and Forbion European 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 Chain Bridge with a short position of Forbion European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chain Bridge and Forbion European.
Diversification Opportunities for Chain Bridge and Forbion European
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chain and Forbion is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chain Bridge I and Forbion European Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forbion European Acq and Chain Bridge 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 Chain Bridge I are associated (or correlated) with Forbion European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forbion European Acq has no effect on the direction of Chain Bridge i.e., Chain Bridge and Forbion European go up and down completely randomly.
Pair Corralation between Chain Bridge and Forbion European
If you would invest 49.00 in Forbion European Acquisition on November 4, 2024 and sell it today you would earn a total of 0.00 from holding Forbion European Acquisition or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chain Bridge I vs. Forbion European Acquisition
Performance |
| Timeline |
| Chain Bridge I |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Forbion European Acq |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chain Bridge and Forbion European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chain Bridge and Forbion European
The main advantage of trading using opposite Chain Bridge and Forbion European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chain Bridge position performs unexpectedly, Forbion European 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 Forbion European will offset losses from the drop in Forbion European's long position.The idea behind Chain Bridge I and Forbion European Acquisition 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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