Correlation Between Malaga Financial and Bayview Acquisition

Can any of the company-specific risk be diversified away by investing in both Malaga Financial and Bayview 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 Malaga Financial and Bayview Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Malaga Financial and Bayview Acquisition

0.33

Correlation Coefficient

Malaga Financial  Bayview Acquisition

Weak diversification

The 3 months correlation between Malaga and Bayview is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Malaga Financial and Bayview Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayview Acquisition Corp and Malaga Financial 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 Malaga Financial are associated (or correlated) with Bayview Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayview Acquisition Corp has no effect on the direction of Malaga Financial i.e., Malaga Financial and Bayview Acquisition go up and down completely randomly.

Pair Corralation between Malaga Financial and Bayview Acquisition

Given the investment horizon of 90 days Malaga Financial is expected to generate 10.92 times less return on investment than Bayview Acquisition. But when comparing it to its historical volatility, Malaga Financial is 3.75 times less risky than Bayview Acquisition. It trades about 0.01 of its potential returns per unit of risk. Bayview Acquisition Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,027  in Bayview Acquisition Corp on March 12, 2024 and sell it today you would earn a total of  8.00  from holding Bayview Acquisition Corp or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Malaga Financial  vs.  Bayview Acquisition Corp

Malaga Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malaga Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Malaga Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bayview Acquisition Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bayview Acquisition Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bayview Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Malaga Financial and Bayview Acquisition

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

The idea behind Malaga Financial and Bayview Acquisition Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.