Correlation Between AltEnergy Acquisition and Stratim Cloud
Can any of the company-specific risk be diversified away by investing in both AltEnergy Acquisition and Stratim Cloud 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 AltEnergy Acquisition and Stratim Cloud into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AltEnergy Acquisition Corp and Stratim Cloud Acquisition, you can compare the effects of market volatilities on AltEnergy Acquisition and Stratim Cloud 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 AltEnergy Acquisition with a short position of Stratim Cloud. Check out your portfolio center. Please also check ongoing floating volatility patterns of AltEnergy Acquisition and Stratim Cloud.
Diversification Opportunities for AltEnergy Acquisition and Stratim Cloud
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between AltEnergy and Stratim is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding AltEnergy Acquisition Corp and Stratim Cloud Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratim Cloud Acquisition and AltEnergy Acquisition 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 AltEnergy Acquisition Corp are associated (or correlated) with Stratim Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratim Cloud Acquisition has no effect on the direction of AltEnergy Acquisition i.e., AltEnergy Acquisition and Stratim Cloud go up and down completely randomly.
Pair Corralation between AltEnergy Acquisition and Stratim Cloud
Assuming the 90 days horizon AltEnergy Acquisition Corp is expected to generate 3.27 times more return on investment than Stratim Cloud. However, AltEnergy Acquisition is 3.27 times more volatile than Stratim Cloud Acquisition. It trades about 0.12 of its potential returns per unit of risk. Stratim Cloud Acquisition is currently generating about 0.14 per unit of risk. If you would invest 9.30 in AltEnergy Acquisition Corp on August 26, 2024 and sell it today you would lose (9.19) from holding AltEnergy Acquisition Corp or give up 98.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 35.77% |
| Values | Daily Returns |
AltEnergy Acquisition Corp vs. Stratim Cloud Acquisition
Performance |
| Timeline |
| AltEnergy Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Stratim Cloud Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AltEnergy Acquisition and Stratim Cloud Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AltEnergy Acquisition and Stratim Cloud
The main advantage of trading using opposite AltEnergy Acquisition and Stratim Cloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AltEnergy Acquisition position performs unexpectedly, Stratim Cloud 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 Stratim Cloud will offset losses from the drop in Stratim Cloud's long position.The idea behind AltEnergy Acquisition Corp and Stratim Cloud 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.Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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