Correlation Between Ignyte Acquisition and Alector

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

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

Diversification Opportunities for Ignyte Acquisition and Alector

0.0

Correlation Coefficient

Ignyte Acquisition  Alector

Pay attention - limited upside

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

Pair Corralation between Ignyte Acquisition and Alector

Assuming the 90 days horizon Ignyte Acquisition Corp is expected to under-perform the Alector. In addition to that, Ignyte Acquisition is 10.93 times more volatile than Alector. It trades about -0.18 of its total potential returns per unit of risk. Alector is currently generating about -0.03 per unit of volatility. If you would invest  836.00  in Alector on October 7, 2024 and sell it today you would lose (630.00) from holding Alector or give up 75.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.01%
Values	Daily Returns

Ignyte Acquisition Corp  vs.  Alector

Ignyte Acquisition Corp

Risk-Adjusted Performance

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Very Weak

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

Alector

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ignyte Acquisition and Alector

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

The idea behind Ignyte Acquisition Corp and Alector 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.