Correlation Between Cardinal Health and AlphaVest Acquisition

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

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

Diversification Opportunities for Cardinal Health and AlphaVest Acquisition

0.34

Correlation Coefficient

Cardinal Health  AlphaVest Acquisition

Weak diversification

The 3 months correlation between Cardinal and AlphaVest is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and AlphaVest Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaVest Acquisition and Cardinal Health 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 Cardinal Health are associated (or correlated) with AlphaVest Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaVest Acquisition has no effect on the direction of Cardinal Health i.e., Cardinal Health and AlphaVest Acquisition go up and down completely randomly.

Pair Corralation between Cardinal Health and AlphaVest Acquisition

Considering the 90-day investment horizon Cardinal Health is expected to generate 6.04 times less return on investment than AlphaVest Acquisition. But when comparing it to its historical volatility, Cardinal Health is 25.38 times less risky than AlphaVest Acquisition. It trades about 0.23 of its potential returns per unit of risk. AlphaVest Acquisition Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16.00  in AlphaVest Acquisition Corp on December 4, 2024 and sell it today you would lose (1.00) from holding AlphaVest Acquisition Corp or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cardinal Health  vs.  AlphaVest Acquisition Corp

Cardinal Health

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

AlphaVest Acquisition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaVest Acquisition Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, AlphaVest Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardinal Health and AlphaVest Acquisition

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

The idea behind Cardinal Health and AlphaVest 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.