Correlation Between Flexible Solutions and Plum Acquisition
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and Plum 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 Flexible Solutions and Plum Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and Plum Acquisition Corp, you can compare the effects of market volatilities on Flexible Solutions and Plum 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 Flexible Solutions with a short position of Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Plum Acquisition.
Diversification Opportunities for Flexible Solutions and Plum Acquisition
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Flexible and Plum is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Plum Acquisition go up and down completely randomly.
Pair Corralation between Flexible Solutions and Plum Acquisition
Considering the 90-day investment horizon Flexible Solutions is expected to generate 26.0 times less return on investment than Plum Acquisition. But when comparing it to its historical volatility, Flexible Solutions International is 25.85 times less risky than Plum Acquisition. It trades about 0.12 of its potential returns per unit of risk. Plum Acquisition Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.07 in Plum Acquisition Corp on September 14, 2024 and sell it today you would earn a total of 20.93 from holding Plum Acquisition Corp or generate 29900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 49.4% |
| Values | Daily Returns |
Flexible Solutions Internation vs. Plum Acquisition Corp
Performance |
| Timeline |
| Flexible Solutions |
| Plum Acquisition Corp |
Flexible Solutions and Plum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and Plum Acquisition
The main advantage of trading using opposite Flexible Solutions and Plum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, Plum 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 Plum Acquisition will offset losses from the drop in Plum Acquisition's long position.| Flexible Solutions vs. LyondellBasell Industries NV | Flexible Solutions vs. Cabot | Flexible Solutions vs. Westlake Chemical | Flexible Solutions vs. Air Products and |
| Plum Acquisition vs. Voyager Acquisition Corp | Plum Acquisition vs. YHN Acquisition I | Plum Acquisition vs. CO2 Energy Transition | Plum Acquisition vs. Vine Hill Capital |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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