Correlation Between GP Act and Alpha One
Can any of the company-specific risk be diversified away by investing in both GP Act and Alpha One 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 GP Act and Alpha One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Act III Acquisition and Alpha One, you can compare the effects of market volatilities on GP Act and Alpha One 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 GP Act with a short position of Alpha One. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Act and Alpha One.
Diversification Opportunities for GP Act and Alpha One
Pay attention - limited upside
The 3 months correlation between GPAT and Alpha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GP Act III Acquisition and Alpha One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha One and GP Act 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 GP Act III Acquisition are associated (or correlated) with Alpha One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha One has no effect on the direction of GP Act i.e., GP Act and Alpha One go up and down completely randomly.
Pair Corralation between GP Act and Alpha One
Given the investment horizon of 90 days GP Act is expected to generate 6.61 times less return on investment than Alpha One. But when comparing it to its historical volatility, GP Act III Acquisition is 12.59 times less risky than Alpha One. It trades about 0.1 of its potential returns per unit of risk. Alpha One is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 200.00 in Alpha One on September 3, 2024 and sell it today you would earn a total of 38.00 from holding Alpha One or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 43.15% |
| Values | Daily Returns |
GP Act III Acquisition vs. Alpha One
Performance |
| Timeline |
| GP Act III |
| Alpha One |
GP Act and Alpha One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Act and Alpha One
The main advantage of trading using opposite GP Act and Alpha One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Act position performs unexpectedly, Alpha One 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 One will offset losses from the drop in Alpha One's long position.The idea behind GP Act III Acquisition and Alpha One 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 One vs. Manaris Corp | Alpha One vs. Green Planet Bio | Alpha One vs. Continental Beverage Brands | Alpha One vs. Opus Magnum Ameris |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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