Correlation Between Alpha Star and Athena Technology

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

By analyzing existing cross correlation between Alpha Star Acquisition and Athena Technology Acquisition, you can compare the effects of market volatilities on Alpha Star and Athena Technology 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 Alpha Star with a short position of Athena Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Star and Athena Technology.

Diversification Opportunities for Alpha Star and Athena Technology

0.15

Correlation Coefficient

Alpha Star  Athena Technology

Average diversification

The 3 months correlation between Alpha and Athena is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Star Acquisition and Athena Technology Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athena Technology and Alpha Star 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 Alpha Star Acquisition are associated (or correlated) with Athena Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athena Technology has no effect on the direction of Alpha Star i.e., Alpha Star and Athena Technology go up and down completely randomly.

Pair Corralation between Alpha Star and Athena Technology

Given the investment horizon of 90 days Alpha Star is expected to generate 2.23 times less return on investment than Athena Technology. But when comparing it to its historical volatility, Alpha Star Acquisition is 3.87 times less risky than Athena Technology. It trades about 0.06 of its potential returns per unit of risk. Athena Technology Acquisition is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,144  in Athena Technology Acquisition on August 31, 2024 and sell it today you would earn a total of  37.00  from holding Athena Technology Acquisition or generate 3.23% return on investment over 90 days.

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

Alpha Star Acquisition  vs.  Athena Technology Acquisition

Alpha Star Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Star Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alpha Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Athena Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Athena Technology Acquisition are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Athena Technology is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Alpha Star and Athena Technology

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

The idea behind Alpha Star Acquisition and Athena Technology Acquisition 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..