Correlation Between Xp and AlphaVest Acquisition

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

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

Diversification Opportunities for Xp and AlphaVest Acquisition

-0.26

Correlation Coefficient

Xp  AlphaVest Acquisition

Very good diversification

The 3 months correlation between Xp and AlphaVest is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and AlphaVest Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaVest Acquisition and Xp 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 Xp Inc are associated (or correlated) with AlphaVest Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaVest Acquisition has no effect on the direction of Xp i.e., Xp and AlphaVest Acquisition go up and down completely randomly.

Pair Corralation between Xp and AlphaVest Acquisition

Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the AlphaVest Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Xp Inc is 5.72 times less risky than AlphaVest Acquisition. The stock trades about -0.22 of its potential returns per unit of risk. The AlphaVest Acquisition Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15.00  in AlphaVest Acquisition Corp on September 13, 2024 and sell it today you would lose (4.96) from holding AlphaVest Acquisition Corp or give up 33.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Xp Inc  vs.  AlphaVest Acquisition Corp

Xp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

AlphaVest Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AlphaVest Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively abnormal basic indicators, AlphaVest Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Xp and AlphaVest Acquisition

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

The idea behind Xp Inc and AlphaVest 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.