Correlation Between Atlantic Coastal and Alpha Partners

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

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

Diversification Opportunities for Atlantic Coastal and Alpha Partners

0.57

Correlation Coefficient

Atlantic Coastal  Alpha Partners

Very weak diversification

The 3 months correlation between Atlantic and Alpha is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Coastal Acquisition and Alpha Partners Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Partners Technology and Atlantic Coastal 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 Atlantic Coastal Acquisition are associated (or correlated) with Alpha Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Partners Technology has no effect on the direction of Atlantic Coastal i.e., Atlantic Coastal and Alpha Partners go up and down completely randomly.

Pair Corralation between Atlantic Coastal and Alpha Partners

Given the investment horizon of 90 days Atlantic Coastal is expected to generate 1.36 times less return on investment than Alpha Partners. But when comparing it to its historical volatility, Atlantic Coastal Acquisition is 1.07 times less risky than Alpha Partners. It trades about 0.04 of its potential returns per unit of risk. Alpha Partners Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,003  in Alpha Partners Technology on September 19, 2024 and sell it today you would earn a total of  40.00  from holding Alpha Partners Technology or generate 3.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Atlantic Coastal Acquisition  vs.  Alpha Partners Technology

Atlantic Coastal Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Coastal Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Atlantic Coastal is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Alpha Partners Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Partners Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Alpha Partners is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Atlantic Coastal and Alpha Partners

The main advantage of trading using opposite Atlantic Coastal and Alpha Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantic Coastal position performs unexpectedly, Alpha Partners 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 Partners will offset losses from the drop in Alpha Partners' long position.

The idea behind Atlantic Coastal Acquisition and Alpha Partners Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.