Correlation Between Alpha One and Horizon Space

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

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

Diversification Opportunities for Alpha One and Horizon Space

-0.44

Correlation Coefficient

Alpha One  Horizon Space

Very good diversification

The 3 months correlation between Alpha and Horizon is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Alpha One and Horizon Space Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Space Acquisition 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 Horizon Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Space Acquisition has no effect on the direction of Alpha One i.e., Alpha One and Horizon Space go up and down completely randomly.

Pair Corralation between Alpha One and Horizon Space

Given the investment horizon of 90 days Alpha One is expected to under-perform the Horizon Space. In addition to that, Alpha One is 4.11 times more volatile than Horizon Space Acquisition. It trades about -0.12 of its total potential returns per unit of risk. Horizon Space Acquisition is currently generating about 0.06 per unit of volatility. If you would invest  1,136  in Horizon Space Acquisition on December 19, 2024 and sell it today you would earn a total of  42.00  from holding Horizon Space Acquisition or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Alpha One  vs.  Horizon Space 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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Horizon Space Acquisition

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Space Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Horizon Space is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alpha One and Horizon Space

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

The idea behind Alpha One and Horizon Space 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.