Correlation Between Alpha One and Ace Global

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

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

Diversification Opportunities for Alpha One and Ace Global

-0.47

Correlation Coefficient

Alpha One  Ace Global

Very good diversification

The 3 months correlation between Alpha and Ace is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alpha One and Ace Global Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Global Business and Alpha One 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 One are associated (or correlated) with Ace Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Global Business has no effect on the direction of Alpha One i.e., Alpha One and Ace Global go up and down completely randomly.

Pair Corralation between Alpha One and Ace Global

Given the investment horizon of 90 days Alpha One is expected to generate 25.02 times more return on investment than Ace Global. However, Alpha One is 25.02 times more volatile than Ace Global Business. It trades about 0.01 of its potential returns per unit of risk. Ace Global Business is currently generating about 0.17 per unit of risk. If you would invest  251.00  in Alpha One on October 11, 2024 and sell it today you would lose (97.00) from holding Alpha One or give up 38.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	25.75%
Values	Daily Returns

Alpha One  vs.  Ace Global Business

Alpha One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ace Global Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ace Global Business has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Ace Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpha One and Ace Global

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

The idea behind Alpha One and Ace Global Business 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.