Correlation Between APx Acquisition and Alpha Star
Can any of the company-specific risk be diversified away by investing in both APx Acquisition and Alpha Star 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 APx Acquisition and Alpha Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APx Acquisition I and Alpha Star Acquisition, you can compare the effects of market volatilities on APx Acquisition and Alpha Star 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 APx Acquisition with a short position of Alpha Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of APx Acquisition and Alpha Star.
Diversification Opportunities for APx Acquisition and Alpha Star
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between APx and Alpha is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding APx Acquisition I and Alpha Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Star Acquisition and APx 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 APx Acquisition I are associated (or correlated) with Alpha Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Star Acquisition has no effect on the direction of APx Acquisition i.e., APx Acquisition and Alpha Star go up and down completely randomly.
Pair Corralation between APx Acquisition and Alpha Star
Given the investment horizon of 90 days APx Acquisition is expected to generate 1.99 times less return on investment than Alpha Star. But when comparing it to its historical volatility, APx Acquisition I is 12.8 times less risky than Alpha Star. It trades about 0.17 of its potential returns per unit of risk. Alpha Star Acquisition is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,144 in Alpha Star Acquisition on September 5, 2024 and sell it today you would earn a total of 51.00 from holding Alpha Star Acquisition or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APx Acquisition I vs. Alpha Star Acquisition
Performance |
| Timeline |
| APx Acquisition I |
| Alpha Star Acquisition |
APx Acquisition and Alpha Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APx Acquisition and Alpha Star
The main advantage of trading using opposite APx Acquisition and Alpha Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APx Acquisition position performs unexpectedly, Alpha Star 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 Alpha Star will offset losses from the drop in Alpha Star's long position.The idea behind APx Acquisition I and Alpha Star 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.| Alpha Star vs. A SPAC II | Alpha Star vs. Alpha One | Alpha Star vs. Athena Technology Acquisition | Alpha Star vs. Healthcare AI Acquisition |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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