Correlation Between Alta Equipment and Blue Ocean

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

Diversification Opportunities for Alta Equipment and Blue Ocean

0.18

Correlation Coefficient

Alta Equipment  Blue Ocean

Average diversification

The 3 months correlation between Alta and Blue is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Blue Ocean Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ocean 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 Blue Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ocean Acquisition has no effect on the direction of Alta Equipment i.e., Alta Equipment and Blue Ocean go up and down completely randomly.

Pair Corralation between Alta Equipment and Blue Ocean

Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the Blue Ocean. In addition to that, Alta Equipment is 2.27 times more volatile than Blue Ocean Acquisition. It trades about -0.03 of its total potential returns per unit of risk. Blue Ocean Acquisition is currently generating about 0.02 per unit of volatility. If you would invest  1,028  in Blue Ocean Acquisition on October 10, 2024 and sell it today you would earn a total of  98.00  from holding Blue Ocean Acquisition or generate 9.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.16%
Values	Daily Returns

Alta Equipment Group  vs.  Blue Ocean Acquisition

Alta Equipment Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alta Equipment reported solid returns over the last few months and may actually be approaching a breakup point.

Blue Ocean Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Ocean Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Blue Ocean is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alta Equipment and Blue Ocean

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

The idea behind Alta Equipment Group and Blue Ocean 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.