Correlation Between Alpha Star and Integrated Wellness

Can any of the company-specific risk be diversified away by investing in both Alpha Star and Integrated Wellness 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 Integrated Wellness 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 Integrated Wellness Acquisition, you can compare the effects of market volatilities on Alpha Star and Integrated Wellness 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 Integrated Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Star and Integrated Wellness.

Diversification Opportunities for Alpha Star and Integrated Wellness

-0.26

Correlation Coefficient

Alpha Star  Integrated Wellness

Very good diversification

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

Pair Corralation between Alpha Star and Integrated Wellness

Given the investment horizon of 90 days Alpha Star Acquisition is expected to generate 3.61 times more return on investment than Integrated Wellness. However, Alpha Star is 3.61 times more volatile than Integrated Wellness Acquisition. It trades about 0.19 of its potential returns per unit of risk. Integrated Wellness Acquisition is currently generating about 0.01 per unit of risk. If you would invest  1,000.00  in Alpha Star Acquisition on December 29, 2024 and sell it today you would earn a total of  547.00  from holding Alpha Star Acquisition or generate 54.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.1%
Values	Daily Returns

Alpha Star Acquisition  vs.  Integrated Wellness Acquisitio

Alpha Star Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Star Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alpha Star sustained solid returns over the last few months and may actually be approaching a breakup point.

Integrated Wellness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integrated Wellness Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Integrated Wellness is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Alpha Star and Integrated Wellness

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

The idea behind Alpha Star Acquisition and Integrated Wellness 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.