Correlation Between Alchemy Investments and Rand Capital

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

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

Diversification Opportunities for Alchemy Investments and Rand Capital

0.53

Correlation Coefficient

Alchemy Investments  Rand Capital

Very weak diversification

The 3 months correlation between Alchemy and Rand is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alchemy Investments Acquisitio and Rand Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Capital Corp and Alchemy Investments 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 Alchemy Investments Acquisition are associated (or correlated) with Rand Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Capital Corp has no effect on the direction of Alchemy Investments i.e., Alchemy Investments and Rand Capital go up and down completely randomly.

Pair Corralation between Alchemy Investments and Rand Capital

Given the investment horizon of 90 days Alchemy Investments is expected to generate 4.21 times less return on investment than Rand Capital. But when comparing it to its historical volatility, Alchemy Investments Acquisition is 16.47 times less risky than Rand Capital. It trades about 0.18 of its potential returns per unit of risk. Rand Capital Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,779  in Rand Capital Corp on December 25, 2024 and sell it today you would earn a total of  122.00  from holding Rand Capital Corp or generate 6.86% return on investment over 90 days.

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

Alchemy Investments Acquisitio  vs.  Rand Capital Corp

Alchemy Investments

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alchemy Investments Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Alchemy Investments is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Rand Capital Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alchemy Investments and Rand Capital

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

The idea behind Alchemy Investments Acquisition and Rand Capital Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.