Correlation Between Kairous Acquisition and Alpha Star
Can any of the company-specific risk be diversified away by investing in both Kairous 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 Kairous 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 Kairous Acquisition Corp and Alpha Star Acquisition, you can compare the effects of market volatilities on Kairous 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 Kairous Acquisition with a short position of Alpha Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kairous Acquisition and Alpha Star.
Diversification Opportunities for Kairous Acquisition and Alpha Star
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kairous and Alpha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kairous Acquisition Corp 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 Kairous 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 Kairous Acquisition Corp 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 Kairous Acquisition i.e., Kairous Acquisition and Alpha Star go up and down completely randomly.
Pair Corralation between Kairous Acquisition and Alpha Star
Assuming the 90 days horizon Kairous Acquisition Corp is expected to generate 1.1 times more return on investment than Alpha Star. However, Kairous Acquisition is 1.1 times more volatile than Alpha Star Acquisition. It trades about 0.18 of its potential returns per unit of risk. Alpha Star Acquisition is currently generating about 0.17 per unit of risk. If you would invest 13.00 in Kairous Acquisition Corp on September 2, 2024 and sell it today you would lose (5.99) from holding Kairous Acquisition Corp or give up 46.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.85% |
| Values | Daily Returns |
Kairous Acquisition Corp vs. Alpha Star Acquisition
Performance |
| Timeline |
| Kairous Acquisition Corp |
| Alpha Star Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Kairous Acquisition and Alpha Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kairous Acquisition and Alpha Star
The main advantage of trading using opposite Kairous Acquisition and Alpha Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kairous 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 Kairous Acquisition Corp 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.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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