Correlation Between Pinnacle Value and Alphacentric Symmetry

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

By analyzing existing cross correlation between Pinnacle Value Fund and Alphacentric Symmetry Strategy, you can compare the effects of market volatilities on Pinnacle Value and Alphacentric Symmetry 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 Pinnacle Value with a short position of Alphacentric Symmetry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle Value and Alphacentric Symmetry.

Diversification Opportunities for Pinnacle Value and Alphacentric Symmetry

0.93

Correlation Coefficient

Pinnacle Value  Alphacentric Symmetry

Almost no diversification

The 3 months correlation between Pinnacle and Alphacentric is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Value Fund and Alphacentric Symmetry Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphacentric Symmetry and Pinnacle Value 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 Pinnacle Value Fund are associated (or correlated) with Alphacentric Symmetry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphacentric Symmetry has no effect on the direction of Pinnacle Value i.e., Pinnacle Value and Alphacentric Symmetry go up and down completely randomly.

Pair Corralation between Pinnacle Value and Alphacentric Symmetry

Assuming the 90 days horizon Pinnacle Value Fund is expected to generate 1.24 times more return on investment than Alphacentric Symmetry. However, Pinnacle Value is 1.24 times more volatile than Alphacentric Symmetry Strategy. It trades about -0.06 of its potential returns per unit of risk. Alphacentric Symmetry Strategy is currently generating about -0.11 per unit of risk. If you would invest  1,621  in Pinnacle Value Fund on December 23, 2024 and sell it today you would lose (41.00) from holding Pinnacle Value Fund or give up 2.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Pinnacle Value Fund  vs.  Alphacentric Symmetry Strategy

Pinnacle Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinnacle Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Pinnacle Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alphacentric Symmetry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphacentric Symmetry Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Alphacentric Symmetry is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pinnacle Value and Alphacentric Symmetry

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

The idea behind Pinnacle Value Fund and Alphacentric Symmetry Strategy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.