Correlation Between MW Investment and Alpha Healthcare

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

By analyzing existing cross correlation between MW Investment Holding and Alpha Healthcare Acquisition, you can compare the effects of market volatilities on MW Investment and Alpha Healthcare 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 MW Investment with a short position of Alpha Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of MW Investment and Alpha Healthcare.

Diversification Opportunities for MW Investment and Alpha Healthcare

0.0

Correlation Coefficient

MW Investment  Alpha Healthcare

Pay attention - limited upside

The 3 months correlation between MEGH and Alpha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MW Investment Holding and Alpha Healthcare Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Healthcare Acq and MW Investment 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 MW Investment Holding are associated (or correlated) with Alpha Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Healthcare Acq has no effect on the direction of MW Investment i.e., MW Investment and Alpha Healthcare go up and down completely randomly.

Pair Corralation between MW Investment and Alpha Healthcare

Given the investment horizon of 90 days MW Investment Holding is expected to generate 42.93 times more return on investment than Alpha Healthcare. However, MW Investment is 42.93 times more volatile than Alpha Healthcare Acquisition. It trades about 0.03 of its potential returns per unit of risk. Alpha Healthcare Acquisition is currently generating about -0.01 per unit of risk. If you would invest  0.26  in MW Investment Holding on October 9, 2024 and sell it today you would lose (0.24) from holding MW Investment Holding or give up 92.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	24.95%
Values	Daily Returns

MW Investment Holding  vs.  Alpha Healthcare Acquisition

MW Investment Holding

Risk-Adjusted Performance

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Very Weak

Over the last 90 days MW Investment Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, MW Investment is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Alpha Healthcare Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Healthcare Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alpha Healthcare is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MW Investment and Alpha Healthcare

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

The idea behind MW Investment Holding and Alpha Healthcare Acquisition 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.