Correlation Between Aeluma and Alphawave

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

By analyzing existing cross correlation between Aeluma Inc and Alphawave IP Group, you can compare the effects of market volatilities on Aeluma and Alphawave 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 Aeluma with a short position of Alphawave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeluma and Alphawave.

Diversification Opportunities for Aeluma and Alphawave

-0.63

Correlation Coefficient

Aeluma  Alphawave

Excellent diversification

The 3 months correlation between Aeluma and Alphawave is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aeluma Inc and Alphawave IP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphawave IP Group and Aeluma 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 Aeluma Inc are associated (or correlated) with Alphawave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphawave IP Group has no effect on the direction of Aeluma i.e., Aeluma and Alphawave go up and down completely randomly.

Pair Corralation between Aeluma and Alphawave

Given the investment horizon of 90 days Aeluma Inc is expected to generate 1.96 times more return on investment than Alphawave. However, Aeluma is 1.96 times more volatile than Alphawave IP Group. It trades about 0.17 of its potential returns per unit of risk. Alphawave IP Group is currently generating about 0.02 per unit of risk. If you would invest  330.00  in Aeluma Inc on October 10, 2024 and sell it today you would earn a total of  443.00  from holding Aeluma Inc or generate 134.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Aeluma Inc  vs.  Alphawave IP Group

Aeluma Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeluma Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Aeluma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alphawave IP Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alphawave IP Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Alphawave may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aeluma and Alphawave

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

The idea behind Aeluma Inc and Alphawave IP Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.