Correlation Between FACT II and A SPAC

Can any of the company-specific risk be diversified away by investing in both FACT II and A SPAC 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 A SPAC 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 A SPAC III, you can compare the effects of market volatilities on FACT II and A SPAC 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 A SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FACT II and A SPAC.

Diversification Opportunities for FACT II and A SPAC

0.68

Correlation Coefficient

FACT II  A SPAC

Poor diversification

The 3 months correlation between FACT and ASPC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FACT II Acquisition and A SPAC III in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A SPAC III 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 A SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A SPAC III has no effect on the direction of FACT II i.e., FACT II and A SPAC go up and down completely randomly.

Pair Corralation between FACT II and A SPAC

Assuming the 90 days horizon FACT II is expected to generate 1.04 times less return on investment than A SPAC. In addition to that, FACT II is 2.07 times more volatile than A SPAC III. It trades about 0.07 of its total potential returns per unit of risk. A SPAC III is currently generating about 0.15 per unit of volatility. If you would invest  1,011  in A SPAC III on April 27, 2025 and sell it today you would earn a total of  15.00  from holding A SPAC III or generate 1.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

FACT II Acquisition  vs.  A SPAC III

FACT II Acquisition

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic 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.

A SPAC III

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in A SPAC III are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, A SPAC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FACT II and A SPAC

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

The idea behind FACT II Acquisition and A SPAC III 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.