Correlation Between Employers Holdings and AlphaTime Acquisition

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

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

Diversification Opportunities for Employers Holdings and AlphaTime Acquisition

0.05

Correlation Coefficient

Employers Holdings  AlphaTime Acquisition

Significant diversification

The 3 months correlation between Employers and AlphaTime is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition and Employers Holdings 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 Employers Holdings are associated (or correlated) with AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of Employers Holdings i.e., Employers Holdings and AlphaTime Acquisition go up and down completely randomly.

Pair Corralation between Employers Holdings and AlphaTime Acquisition

Considering the 90-day investment horizon Employers Holdings is expected to generate 20.01 times less return on investment than AlphaTime Acquisition. But when comparing it to its historical volatility, Employers Holdings is 16.56 times less risky than AlphaTime Acquisition. It trades about 0.11 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.48  in AlphaTime Acquisition Corp on September 17, 2024 and sell it today you would earn a total of  0.32  from holding AlphaTime Acquisition Corp or generate 21.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	39.06%
Values	Daily Returns

Employers Holdings  vs.  AlphaTime Acquisition Corp

Employers Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Employers Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AlphaTime Acquisition

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaTime Acquisition Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, AlphaTime Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Employers Holdings and AlphaTime Acquisition

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

The idea behind Employers Holdings and AlphaTime 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.