Correlation Between AlphaTime Acquisition and Insteel Industries

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

By analyzing existing cross correlation between AlphaTime Acquisition Corp and Insteel Industries, you can compare the effects of market volatilities on AlphaTime Acquisition and Insteel Industries 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 AlphaTime Acquisition with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of AlphaTime Acquisition and Insteel Industries.

Diversification Opportunities for AlphaTime Acquisition and Insteel Industries

-0.29

Correlation Coefficient

AlphaTime Acquisition  Insteel Industries

Very good diversification

The 3 months correlation between AlphaTime and Insteel is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AlphaTime Acquisition Corp and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and AlphaTime Acquisition 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 AlphaTime Acquisition Corp are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of AlphaTime Acquisition i.e., AlphaTime Acquisition and Insteel Industries go up and down completely randomly.

Pair Corralation between AlphaTime Acquisition and Insteel Industries

Given the investment horizon of 90 days AlphaTime Acquisition Corp is expected to generate 0.06 times more return on investment than Insteel Industries. However, AlphaTime Acquisition Corp is 17.35 times less risky than Insteel Industries. It trades about 0.15 of its potential returns per unit of risk. Insteel Industries is currently generating about -0.04 per unit of risk. If you would invest  1,120  in AlphaTime Acquisition Corp on September 15, 2024 and sell it today you would earn a total of  14.00  from holding AlphaTime Acquisition Corp or generate 1.25% return on investment over 90 days.

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

AlphaTime Acquisition Corp  vs.  Insteel Industries

AlphaTime Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaTime Acquisition Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, AlphaTime Acquisition is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Insteel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insteel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Insteel Industries is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AlphaTime Acquisition and Insteel Industries

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

The idea behind AlphaTime Acquisition Corp and Insteel Industries 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.