Correlation Between SPACE and Alger Small

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

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

Diversification Opportunities for SPACE and Alger Small

0.37

Correlation Coefficient

SPACE  Alger Small

Weak diversification

The 3 months correlation between SPACE and Alger is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Alger Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Small Cap and SPACE 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 SPACE are associated (or correlated) with Alger Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Small Cap has no effect on the direction of SPACE i.e., SPACE and Alger Small go up and down completely randomly.

Pair Corralation between SPACE and Alger Small

Assuming the 90 days horizon SPACE is expected to under-perform the Alger Small. In addition to that, SPACE is 3.48 times more volatile than Alger Small Cap. It trades about -0.12 of its total potential returns per unit of risk. Alger Small Cap is currently generating about -0.16 per unit of volatility. If you would invest  2,127  in Alger Small Cap on December 20, 2024 and sell it today you would lose (342.00) from holding Alger Small Cap or give up 16.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

SPACE  vs.  Alger Small Cap

SPACE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPACE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SPACE shareholders.

Alger Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with SPACE and Alger Small

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

The idea behind SPACE and Alger Small Cap 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.