Correlation Between Alternative Investment and Mystate

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

By analyzing existing cross correlation between Alternative Investment Trust and Mystate, you can compare the effects of market volatilities on Alternative Investment and Mystate 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 Alternative Investment with a short position of Mystate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Investment and Mystate.

Diversification Opportunities for Alternative Investment and Mystate

0.54

Correlation Coefficient

Alternative Investment  Mystate

Very weak diversification

The 3 months correlation between Alternative and Mystate is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and Mystate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mystate and Alternative Investment 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 Alternative Investment Trust are associated (or correlated) with Mystate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mystate has no effect on the direction of Alternative Investment i.e., Alternative Investment and Mystate go up and down completely randomly.

Pair Corralation between Alternative Investment and Mystate

Assuming the 90 days trading horizon Alternative Investment Trust is expected to generate 1.34 times more return on investment than Mystate. However, Alternative Investment is 1.34 times more volatile than Mystate. It trades about 0.06 of its potential returns per unit of risk. Mystate is currently generating about 0.04 per unit of risk. If you would invest  88.00  in Alternative Investment Trust on October 5, 2024 and sell it today you would earn a total of  56.00  from holding Alternative Investment Trust or generate 63.64% return on investment over 90 days.

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

Alternative Investment Trust  vs.  Mystate

Alternative Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alternative Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Mystate

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mystate are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mystate unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alternative Investment and Mystate

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

The idea behind Alternative Investment Trust and Mystate 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.