Correlation Between AlphaVest Acquisition and OCA Acquisition

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

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

Diversification Opportunities for AlphaVest Acquisition and OCA Acquisition

0.8

Correlation Coefficient

AlphaVest Acquisition  OCA Acquisition

Very poor diversification

The 3 months correlation between AlphaVest and OCA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AlphaVest Acquisition Corp and OCA Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCA Acquisition Corp and AlphaVest 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 AlphaVest Acquisition Corp are associated (or correlated) with OCA Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCA Acquisition Corp has no effect on the direction of AlphaVest Acquisition i.e., AlphaVest Acquisition and OCA Acquisition go up and down completely randomly.

Pair Corralation between AlphaVest Acquisition and OCA Acquisition

Given the investment horizon of 90 days AlphaVest Acquisition Corp is expected to generate 1.0 times more return on investment than OCA Acquisition. However, AlphaVest Acquisition Corp is 1.0 times less risky than OCA Acquisition. It trades about 0.06 of its potential returns per unit of risk. OCA Acquisition Corp is currently generating about 0.05 per unit of risk. If you would invest  1,028  in AlphaVest Acquisition Corp on October 26, 2024 and sell it today you would earn a total of  110.90  from holding AlphaVest Acquisition Corp or generate 10.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	80.35%
Values	Daily Returns

AlphaVest Acquisition Corp  vs.  OCA Acquisition Corp

AlphaVest Acquisition

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaVest Acquisition Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, AlphaVest Acquisition is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

OCA Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCA Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, OCA Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AlphaVest Acquisition and OCA Acquisition

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

The idea behind AlphaVest Acquisition Corp and OCA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .