Correlation Between Cetus Capital and Brookfield Finance

Can any of the company-specific risk be diversified away by investing in both Cetus Capital and Brookfield Finance 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 Cetus Capital and Brookfield Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cetus Capital Acquisition and Brookfield Finance 450, you can compare the effects of market volatilities on Cetus Capital and Brookfield Finance 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 Cetus Capital with a short position of Brookfield Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cetus Capital and Brookfield Finance.

Diversification Opportunities for Cetus Capital and Brookfield Finance

-0.39

Correlation Coefficient

Cetus Capital  Brookfield Finance

Very good diversification

The 3 months correlation between Cetus and Brookfield is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cetus Capital Acquisition and Brookfield Finance 450 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Finance 450 and Cetus Capital 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 Cetus Capital Acquisition are associated (or correlated) with Brookfield Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Finance 450 has no effect on the direction of Cetus Capital i.e., Cetus Capital and Brookfield Finance go up and down completely randomly.

Pair Corralation between Cetus Capital and Brookfield Finance

Assuming the 90 days horizon Cetus Capital Acquisition is expected to generate 2.15 times more return on investment than Brookfield Finance. However, Cetus Capital is 2.15 times more volatile than Brookfield Finance 450. It trades about 0.01 of its potential returns per unit of risk. Brookfield Finance 450 is currently generating about -0.17 per unit of risk. If you would invest  20.00  in Cetus Capital Acquisition on January 31, 2024 and sell it today you would earn a total of  0.00  from holding Cetus Capital Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.1%
Values	Daily Returns

Cetus Capital Acquisition  vs.  Brookfield Finance 450

Cetus Capital Acquisition

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Cetus Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Cetus Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Finance 450

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Finance 450 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Brookfield Finance is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Cetus Capital and Brookfield Finance

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

The idea behind Cetus Capital Acquisition and Brookfield Finance 450 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.