Correlation Between FACT II and Roman DBDR

Can any of the company-specific risk be diversified away by investing in both FACT II and Roman DBDR 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 FACT II and Roman DBDR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FACT II Acquisition and Roman DBDR Acquisition, you can compare the effects of market volatilities on FACT II and Roman DBDR 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 FACT II with a short position of Roman DBDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of FACT II and Roman DBDR.

Diversification Opportunities for FACT II and Roman DBDR

-0.24

Correlation Coefficient

FACT II  Roman DBDR

Very good diversification

The 3 months correlation between FACT and Roman is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding FACT II Acquisition and Roman DBDR Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roman DBDR Acquisition and FACT II 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 FACT II Acquisition are associated (or correlated) with Roman DBDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roman DBDR Acquisition has no effect on the direction of FACT II i.e., FACT II and Roman DBDR go up and down completely randomly.

Pair Corralation between FACT II and Roman DBDR

Given the investment horizon of 90 days FACT II Acquisition is expected to generate 31.35 times more return on investment than Roman DBDR. However, FACT II is 31.35 times more volatile than Roman DBDR Acquisition. It trades about 0.01 of its potential returns per unit of risk. Roman DBDR Acquisition is currently generating about 0.14 per unit of risk. If you would invest  1,110  in FACT II Acquisition on August 23, 2025 and sell it today you would lose (75.00) from holding FACT II Acquisition or give up 6.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FACT II Acquisition  vs.  Roman DBDR Acquisition

FACT II Acquisition

Risk-Adjusted Performance

Weakest

Over the last 90 days FACT II Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, FACT II is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Roman DBDR Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roman DBDR Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Roman DBDR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FACT II and Roman DBDR

The main advantage of trading using opposite FACT II and Roman DBDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FACT II position performs unexpectedly, Roman DBDR 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 Roman DBDR will offset losses from the drop in Roman DBDR's long position.

The idea behind FACT II Acquisition and Roman DBDR 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.