Correlation Between Alpha One and Mountain I

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

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

Diversification Opportunities for Alpha One and Mountain I

-0.46

Correlation Coefficient

Alpha One  Mountain I

Very good diversification

The 3 months correlation between Alpha and Mountain is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Alpha One and Mountain I Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain I 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 Mountain I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain I Acquisition has no effect on the direction of Alpha One i.e., Alpha One and Mountain I go up and down completely randomly.

Pair Corralation between Alpha One and Mountain I

Given the investment horizon of 90 days Alpha One is expected to under-perform the Mountain I. In addition to that, Alpha One is 6.9 times more volatile than Mountain I Acquisition. It trades about -0.12 of its total potential returns per unit of risk. Mountain I Acquisition is currently generating about -0.35 per unit of volatility. If you would invest  1,172  in Mountain I Acquisition on October 26, 2024 and sell it today you would lose (33.00) from holding Mountain I Acquisition or give up 2.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	19.35%
Values	Daily Returns

Alpha One  vs.  Mountain I Acquisition

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 inconsistent 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.

Mountain I Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain I Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alpha One and Mountain I

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

The idea behind Alpha One and Mountain I 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.