Correlation Between Acri Capital and Alpha Star

Can any of the company-specific risk be diversified away by investing in both Acri Capital 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 Acri Capital and Alpha Star into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acri Capital Acquisition and Alpha Star Acquisition, you can compare the effects of market volatilities on Acri Capital 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 Acri Capital with a short position of Alpha Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acri Capital and Alpha Star.

Diversification Opportunities for Acri Capital and Alpha Star

0.22

Correlation Coefficient

Acri Capital  Alpha Star

Modest diversification

The 3 months correlation between Acri and Alpha is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Acri Capital Acquisition 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 Acri Capital 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 Acri Capital Acquisition 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 Acri Capital i.e., Acri Capital and Alpha Star go up and down completely randomly.

Pair Corralation between Acri Capital and Alpha Star

Given the investment horizon of 90 days Acri Capital Acquisition is expected to under-perform the Alpha Star. In addition to that, Acri Capital is 15.25 times more volatile than Alpha Star Acquisition. It trades about -0.03 of its total potential returns per unit of risk. Alpha Star Acquisition is currently generating about 0.11 per unit of volatility. If you would invest  1,175  in Alpha Star Acquisition on September 13, 2024 and sell it today you would earn a total of  45.00  from holding Alpha Star Acquisition or generate 3.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	19.05%
Values	Daily Returns

Acri Capital Acquisition  vs.  Alpha Star Acquisition

Acri Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acri Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alpha Star Acquisition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Star Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alpha Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Acri Capital and Alpha Star

The main advantage of trading using opposite Acri Capital and Alpha Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acri Capital 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 Acri Capital Acquisition 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.