Correlation Between Lincoln Electric and AlphaTime Acquisition

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

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

Diversification Opportunities for Lincoln Electric and AlphaTime Acquisition

0.26

Correlation Coefficient

Lincoln Electric  AlphaTime Acquisition

Modest diversification

The 3 months correlation between Lincoln and AlphaTime is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric 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 Lincoln Electric 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 Lincoln Electric 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 Lincoln Electric i.e., Lincoln Electric and AlphaTime Acquisition go up and down completely randomly.

Pair Corralation between Lincoln Electric and AlphaTime Acquisition

Given the investment horizon of 90 days Lincoln Electric is expected to generate 29.88 times less return on investment than AlphaTime Acquisition. But when comparing it to its historical volatility, Lincoln Electric Holdings is 27.09 times less risky than AlphaTime Acquisition. It trades about 0.04 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in AlphaTime Acquisition Corp on October 9, 2024 and sell it today you would earn a total of  1,134  from holding AlphaTime Acquisition Corp or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.25%
Values	Daily Returns

Lincoln Electric Holdings  vs.  AlphaTime Acquisition Corp

Lincoln Electric Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lincoln Electric Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Lincoln Electric is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

AlphaTime Acquisition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaTime Acquisition Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, AlphaTime Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lincoln Electric and AlphaTime Acquisition

The main advantage of trading using opposite Lincoln Electric and AlphaTime Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric 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 Lincoln Electric 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.