Correlation Between Alpha One and SPACE

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

Diversification Opportunities for Alpha One and SPACE

0.71

Correlation Coefficient

Alpha One  SPACE

Poor diversification

The 3 months correlation between Alpha and SPACE is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alpha One and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of Alpha One i.e., Alpha One and SPACE go up and down completely randomly.

Pair Corralation between Alpha One and SPACE

Given the investment horizon of 90 days Alpha One is expected to generate 0.7 times more return on investment than SPACE. However, Alpha One is 1.42 times less risky than SPACE. It trades about -0.12 of its potential returns per unit of risk. SPACE is currently generating about -0.16 per unit of risk. If you would invest  238.00  in Alpha One on December 1, 2024 and sell it today you would lose (84.00) from holding Alpha One or give up 35.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Alpha One  vs.  SPACE

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 fragile 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.

SPACE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPACE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SPACE shareholders.

Pair Trading with Alpha One and SPACE

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

The idea behind Alpha One and SPACE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.