Correlation Between Malacca Straits and Altitude Acquisition

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

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

Diversification Opportunities for Malacca Straits and Altitude Acquisition

0.52

Correlation Coefficient

Malacca Straits  Altitude Acquisition

Very weak diversification

The 3 months correlation between Malacca and Altitude is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Malacca Straits Acquisition and Altitude Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altitude Acquisition Corp and Malacca Straits 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 Malacca Straits Acquisition are associated (or correlated) with Altitude Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altitude Acquisition Corp has no effect on the direction of Malacca Straits i.e., Malacca Straits and Altitude Acquisition go up and down completely randomly.

Pair Corralation between Malacca Straits and Altitude Acquisition

Assuming the 90 days horizon Malacca Straits Acquisition is expected to generate 4.02 times more return on investment than Altitude Acquisition. However, Malacca Straits is 4.02 times more volatile than Altitude Acquisition Corp. It trades about 0.07 of its potential returns per unit of risk. Altitude Acquisition Corp is currently generating about 0.05 per unit of risk. If you would invest  6.00  in Malacca Straits Acquisition on October 7, 2024 and sell it today you would lose (5.86) from holding Malacca Straits Acquisition or give up 97.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	53.44%
Values	Daily Returns

Malacca Straits Acquisition  vs.  Altitude Acquisition Corp

Malacca Straits Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malacca Straits Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Malacca Straits is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Altitude Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altitude Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Altitude Acquisition is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Malacca Straits and Altitude Acquisition

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

The idea behind Malacca Straits Acquisition and Altitude 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..