Correlation Between ReAlpha Tech and Acumen Pharmaceuticals

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

By analyzing existing cross correlation between reAlpha Tech Corp and Acumen Pharmaceuticals, you can compare the effects of market volatilities on ReAlpha Tech and Acumen Pharmaceuticals 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 ReAlpha Tech with a short position of Acumen Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReAlpha Tech and Acumen Pharmaceuticals.

Diversification Opportunities for ReAlpha Tech and Acumen Pharmaceuticals

-0.29

Correlation Coefficient

ReAlpha Tech  Acumen Pharmaceuticals

Very good diversification

The 3 months correlation between ReAlpha and Acumen is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding reAlpha Tech Corp and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals and ReAlpha Tech 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 reAlpha Tech Corp are associated (or correlated) with Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of ReAlpha Tech i.e., ReAlpha Tech and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between ReAlpha Tech and Acumen Pharmaceuticals

Given the investment horizon of 90 days reAlpha Tech Corp is expected to generate 0.76 times more return on investment than Acumen Pharmaceuticals. However, reAlpha Tech Corp is 1.32 times less risky than Acumen Pharmaceuticals. It trades about -0.06 of its potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about -0.06 per unit of risk. If you would invest  141.00  in reAlpha Tech Corp on September 15, 2024 and sell it today you would lose (23.00) from holding reAlpha Tech Corp or give up 16.31% of portfolio value over 90 days.

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

reAlpha Tech Corp  vs.  Acumen Pharmaceuticals

reAlpha Tech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days reAlpha Tech Corp 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.

Acumen Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acumen Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ReAlpha Tech and Acumen Pharmaceuticals

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

The idea behind reAlpha Tech Corp and Acumen Pharmaceuticals 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.