Correlation Between Alaska Air and AlphaTime Acquisition

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

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

Diversification Opportunities for Alaska Air and AlphaTime Acquisition

0.26

Correlation Coefficient

Alaska Air  AlphaTime Acquisition

Modest diversification

The 3 months correlation between Alaska and AlphaTime is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition and Alaska Air 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 Alaska Air Group are associated (or correlated) with AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of Alaska Air i.e., Alaska Air and AlphaTime Acquisition go up and down completely randomly.

Pair Corralation between Alaska Air and AlphaTime Acquisition

Considering the 90-day investment horizon Alaska Air is expected to generate 107.02 times less return on investment than AlphaTime Acquisition. But when comparing it to its historical volatility, Alaska Air Group is 52.69 times less risky than AlphaTime Acquisition. It trades about 0.06 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  16.00  in AlphaTime Acquisition Corp on December 4, 2024 and sell it today you would earn a total of  4.00  from holding AlphaTime Acquisition Corp or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	44.74%
Values	Daily Returns

Alaska Air Group  vs.  AlphaTime Acquisition Corp

Alaska Air Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Alaska Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

AlphaTime Acquisition

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaTime Acquisition Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, AlphaTime Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alaska Air and AlphaTime Acquisition

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

The idea behind Alaska Air Group and AlphaTime Acquisition 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.