Correlation Between Alignvest Acquisition and BMTC

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

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

Diversification Opportunities for Alignvest Acquisition and BMTC

-0.09

Correlation Coefficient

Alignvest Acquisition  BMTC

Good diversification

The 3 months correlation between Alignvest and BMTC is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alignvest Acquisition II and BMTC Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMTC Group and Alignvest 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 Alignvest Acquisition II are associated (or correlated) with BMTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMTC Group has no effect on the direction of Alignvest Acquisition i.e., Alignvest Acquisition and BMTC go up and down completely randomly.

Pair Corralation between Alignvest Acquisition and BMTC

Assuming the 90 days trading horizon Alignvest Acquisition II is expected to generate 1.13 times more return on investment than BMTC. However, Alignvest Acquisition is 1.13 times more volatile than BMTC Group. It trades about 0.05 of its potential returns per unit of risk. BMTC Group is currently generating about 0.01 per unit of risk. If you would invest  456.00  in Alignvest Acquisition II on October 11, 2024 and sell it today you would earn a total of  174.00  from holding Alignvest Acquisition II or generate 38.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alignvest Acquisition II  vs.  BMTC Group

Alignvest Acquisition

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alignvest Acquisition II are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Alignvest Acquisition is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BMTC Group

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BMTC Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMTC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alignvest Acquisition and BMTC

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

The idea behind Alignvest Acquisition II and BMTC Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.