Correlation Between FACT II and AA Mission

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

Diversification Opportunities for FACT II and AA Mission

0.41

Correlation Coefficient

FACT II  AA Mission

Very weak diversification

The 3 months correlation between FACT and AAM is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding FACT II Acquisition and AA Mission Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AA Mission 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 AA Mission. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AA Mission Acquisition has no effect on the direction of FACT II i.e., FACT II and AA Mission go up and down completely randomly.

Pair Corralation between FACT II and AA Mission

Assuming the 90 days horizon FACT II Acquisition is expected to generate 50.1 times more return on investment than AA Mission. However, FACT II is 50.1 times more volatile than AA Mission Acquisition. It trades about 0.02 of its potential returns per unit of risk. AA Mission Acquisition is currently generating about 0.1 per unit of risk. If you would invest  30.00  in FACT II Acquisition on June 29, 2025 and sell it today you would lose (1.00) from holding FACT II Acquisition or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	61.9%
Values	Daily Returns

FACT II Acquisition  vs.  AA Mission Acquisition

FACT II Acquisition

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, FACT II may actually be approaching a critical reversion point that can send shares even higher in October 2025.

AA Mission Acquisition

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in AA Mission Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AA Mission is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FACT II and AA Mission

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

The idea behind FACT II Acquisition and AA Mission 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.