Correlation Between Alpha One and RF Acquisition

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

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

Diversification Opportunities for Alpha One and RF Acquisition

-0.16

Correlation Coefficient

Alpha One  RF Acquisition

Good diversification

The 3 months correlation between Alpha and RFAC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alpha One and RF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Acquisition Corp 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 RF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Acquisition Corp has no effect on the direction of Alpha One i.e., Alpha One and RF Acquisition go up and down completely randomly.

Pair Corralation between Alpha One and RF Acquisition

Given the investment horizon of 90 days Alpha One is expected to under-perform the RF Acquisition. In addition to that, Alpha One is 20.74 times more volatile than RF Acquisition Corp. It trades about -0.21 of its total potential returns per unit of risk. RF Acquisition Corp is currently generating about -0.12 per unit of volatility. If you would invest  1,147  in RF Acquisition Corp on October 12, 2024 and sell it today you would lose (11.00) from holding RF Acquisition Corp or give up 0.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alpha One  vs.  RF Acquisition Corp

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.

RF Acquisition Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RF Acquisition Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, RF Acquisition is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alpha One and RF Acquisition

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

The idea behind Alpha One and RF Acquisition Corp 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 Stocks Directory module to find actively traded stocks across global markets.