Correlation Between Apollo Strategic and AltEnergy Acquisition
Can any of the company-specific risk be diversified away by investing in both Apollo Strategic and AltEnergy 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 Apollo Strategic and AltEnergy Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Strategic Growth and AltEnergy Acquisition Corp, you can compare the effects of market volatilities on Apollo Strategic and AltEnergy 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 Apollo Strategic with a short position of AltEnergy Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Strategic and AltEnergy Acquisition.
Diversification Opportunities for Apollo Strategic and AltEnergy Acquisition
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apollo and AltEnergy is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Strategic Growth and AltEnergy Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltEnergy Acquisition and Apollo Strategic 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 Apollo Strategic Growth are associated (or correlated) with AltEnergy Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltEnergy Acquisition has no effect on the direction of Apollo Strategic i.e., Apollo Strategic and AltEnergy Acquisition go up and down completely randomly.
Pair Corralation between Apollo Strategic and AltEnergy Acquisition
Given the investment horizon of 90 days Apollo Strategic is expected to generate 654.86 times less return on investment than AltEnergy Acquisition. But when comparing it to its historical volatility, Apollo Strategic Growth is 565.51 times less risky than AltEnergy Acquisition. It trades about 0.11 of its potential returns per unit of risk. AltEnergy Acquisition Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 10.00 in AltEnergy Acquisition Corp on September 2, 2024 and sell it today you would lose (9.89) from holding AltEnergy Acquisition Corp or give up 98.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 57.25% |
| Values | Daily Returns |
Apollo Strategic Growth vs. AltEnergy Acquisition Corp
Performance |
| Timeline |
| Apollo Strategic Growth |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AltEnergy Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Apollo Strategic and AltEnergy Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Strategic and AltEnergy Acquisition
The main advantage of trading using opposite Apollo Strategic and AltEnergy Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Strategic position performs unexpectedly, AltEnergy 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 AltEnergy Acquisition will offset losses from the drop in AltEnergy Acquisition's long position.The idea behind Apollo Strategic Growth and AltEnergy 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.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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