Correlation Between TKB Critical and American Acquisition
Can any of the company-specific risk be diversified away by investing in both TKB Critical and American 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 TKB Critical and American Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TKB Critical Technologies and American Acquisition Opportunity, you can compare the effects of market volatilities on TKB Critical and American 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 TKB Critical with a short position of American Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKB Critical and American Acquisition.
Diversification Opportunities for TKB Critical and American Acquisition
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between TKB and American is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding TKB Critical Technologies and American Acquisition Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Acquisition and TKB Critical 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 TKB Critical Technologies are associated (or correlated) with American Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Acquisition has no effect on the direction of TKB Critical i.e., TKB Critical and American Acquisition go up and down completely randomly.
Pair Corralation between TKB Critical and American Acquisition
Assuming the 90 days horizon TKB Critical Technologies is expected to generate 21.82 times more return on investment than American Acquisition. However, TKB Critical is 21.82 times more volatile than American Acquisition Opportunity. It trades about 0.04 of its potential returns per unit of risk. American Acquisition Opportunity is currently generating about 0.09 per unit of risk. If you would invest 1,030 in TKB Critical Technologies on August 28, 2024 and sell it today you would earn a total of 61.00 from holding TKB Critical Technologies or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 39.71% |
| Values | Daily Returns |
TKB Critical Technologies vs. American Acquisition Opportuni
Performance |
| Timeline |
| TKB Critical Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
TKB Critical and American Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TKB Critical and American Acquisition
The main advantage of trading using opposite TKB Critical and American Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKB Critical position performs unexpectedly, American 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 American Acquisition will offset losses from the drop in American Acquisition's long position.| TKB Critical vs. American Axle Manufacturing | TKB Critical vs. Cars Inc | TKB Critical vs. Viemed Healthcare | TKB Critical vs. Magna International |
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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