Correlation Between Mountain I and Altenergy Acquisition

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

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

Diversification Opportunities for Mountain I and Altenergy Acquisition

0.66

Correlation Coefficient

Mountain I  Altenergy Acquisition

Poor diversification

The 3 months correlation between Mountain and Altenergy is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mountain I Acquisition and Altenergy Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altenergy Acquisition and Mountain I 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 Mountain I Acquisition are associated (or correlated) with Altenergy Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altenergy Acquisition has no effect on the direction of Mountain I i.e., Mountain I and Altenergy Acquisition go up and down completely randomly.

Pair Corralation between Mountain I and Altenergy Acquisition

Given the investment horizon of 90 days Mountain I Acquisition is expected to under-perform the Altenergy Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Mountain I Acquisition is 19.03 times less risky than Altenergy Acquisition. The stock trades about -0.4 of its potential returns per unit of risk. The Altenergy Acquisition Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,130  in Altenergy Acquisition Corp on October 25, 2024 and sell it today you would lose (58.00) from holding Altenergy Acquisition Corp or give up 5.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.86%
Values	Daily Returns

Mountain I Acquisition  vs.  Altenergy Acquisition Corp

Mountain I Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain I Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Altenergy Acquisition

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Altenergy Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain technical and fundamental indicators, Altenergy Acquisition unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mountain I and Altenergy Acquisition

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

The idea behind Mountain I Acquisition and Altenergy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.