Correlation Between Alpha One and Embrace Change

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

By analyzing existing cross correlation between Alpha One and Embrace Change Acquisition, you can compare the effects of market volatilities on Alpha One and Embrace Change 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 Embrace Change. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha One and Embrace Change.

Diversification Opportunities for Alpha One and Embrace Change

-0.07

Correlation Coefficient

Alpha One  Embrace Change

Good diversification

The 3 months correlation between Alpha and Embrace is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alpha One and Embrace Change Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embrace Change Acqui 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 Embrace Change. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embrace Change Acqui has no effect on the direction of Alpha One i.e., Alpha One and Embrace Change go up and down completely randomly.

Pair Corralation between Alpha One and Embrace Change

If you would invest  1.16  in Embrace Change Acquisition on December 26, 2024 and sell it today you would earn a total of  2.70  from holding Embrace Change Acquisition or generate 232.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.03%
Values	Daily Returns

Alpha One  vs.  Embrace Change Acquisition

Alpha One

Risk-Adjusted Performance

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 very healthy basic indicators, Alpha One is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Embrace Change Acqui

Risk-Adjusted Performance

Solid

Over the last 90 days Embrace Change Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile technical and fundamental indicators, Embrace Change showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha One and Embrace Change

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

The idea behind Alpha One and Embrace Change 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.