Correlation Between Alta Equipment and AlphaVest Acquisition

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

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

Diversification Opportunities for Alta Equipment and AlphaVest Acquisition

-0.76

Correlation Coefficient

Alta Equipment  AlphaVest Acquisition

Pay attention - limited upside

The 3 months correlation between Alta and AlphaVest is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and AlphaVest Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaVest Acquisition and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with AlphaVest Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaVest Acquisition has no effect on the direction of Alta Equipment i.e., Alta Equipment and AlphaVest Acquisition go up and down completely randomly.

Pair Corralation between Alta Equipment and AlphaVest Acquisition

Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the AlphaVest Acquisition. In addition to that, Alta Equipment is 17.78 times more volatile than AlphaVest Acquisition Corp. It trades about -0.04 of its total potential returns per unit of risk. AlphaVest Acquisition Corp is currently generating about 0.13 per unit of volatility. If you would invest  1,135  in AlphaVest Acquisition Corp on December 20, 2024 and sell it today you would earn a total of  21.00  from holding AlphaVest Acquisition Corp or generate 1.85% return on investment over 90 days.

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

Alta Equipment Group  vs.  AlphaVest Acquisition Corp

Alta Equipment Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alta Equipment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AlphaVest Acquisition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaVest Acquisition Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, AlphaVest Acquisition is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Alta Equipment and AlphaVest Acquisition

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

The idea behind Alta Equipment Group and AlphaVest 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.