Correlation Between Embrace Change and AlphaVest Acquisition

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

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

Diversification Opportunities for Embrace Change and AlphaVest Acquisition

0.37

Correlation Coefficient

Embrace Change  AlphaVest Acquisition

Weak diversification

The 3 months correlation between Embrace and AlphaVest is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and AlphaVest Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaVest Acquisition and Embrace Change 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 Embrace Change Acquisition 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 Embrace Change i.e., Embrace Change and AlphaVest Acquisition go up and down completely randomly.

Pair Corralation between Embrace Change and AlphaVest Acquisition

Assuming the 90 days horizon Embrace Change is expected to generate 43.98 times less return on investment than AlphaVest Acquisition. But when comparing it to its historical volatility, Embrace Change Acquisition is 50.69 times less risky than AlphaVest Acquisition. It trades about 0.15 of its potential returns per unit of risk. AlphaVest Acquisition Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  15.00  in AlphaVest Acquisition Corp on December 30, 2024 and sell it today you would earn a total of  9.00  from holding AlphaVest Acquisition Corp or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Embrace Change Acquisition  vs.  AlphaVest Acquisition Corp

Embrace Change Acqui

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Embrace Change is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AlphaVest Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embrace Change and AlphaVest Acquisition

The main advantage of trading using opposite Embrace Change and AlphaVest Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change 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 Embrace Change Acquisition 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.