Correlation Between Sound Point and GSR II
Can any of the company-specific risk be diversified away by investing in both Sound Point and GSR II 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 Sound Point and GSR II into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Point Acquisition and GSR II Meteora, you can compare the effects of market volatilities on Sound Point and GSR II 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 Sound Point with a short position of GSR II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Point and GSR II.
Diversification Opportunities for Sound Point and GSR II
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sound and GSR is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sound Point Acquisition and GSR II Meteora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSR II Meteora and Sound Point 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 Sound Point Acquisition are associated (or correlated) with GSR II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSR II Meteora has no effect on the direction of Sound Point i.e., Sound Point and GSR II go up and down completely randomly.
Pair Corralation between Sound Point and GSR II
Assuming the 90 days horizon Sound Point Acquisition is expected to generate 0.14 times more return on investment than GSR II. However, Sound Point Acquisition is 6.92 times less risky than GSR II. It trades about 0.03 of its potential returns per unit of risk. GSR II Meteora is currently generating about -0.25 per unit of risk. If you would invest 1,059 in Sound Point Acquisition on August 30, 2024 and sell it today you would earn a total of 7.00 from holding Sound Point Acquisition or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 64.1% |
| Values | Daily Returns |
Sound Point Acquisition vs. GSR II Meteora
Performance |
| Timeline |
| Sound Point Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| GSR II Meteora |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sound Point and GSR II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Point and GSR II
The main advantage of trading using opposite Sound Point and GSR II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Point position performs unexpectedly, GSR II 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 GSR II will offset losses from the drop in GSR II's long position.| Sound Point vs. Patria Latin American | Sound Point vs. Rf Acquisition Corp | Sound Point vs. Valuence Merger Corp |
| GSR II vs. Bel Fuse A | GSR II vs. Amkor Technology | GSR II vs. Analog Devices | GSR II vs. Iridium Communications |
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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