Correlation Between 26 Capital and Atlantic Coastal

Can any of the company-specific risk be diversified away by investing in both 26 Capital and Atlantic Coastal 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 26 Capital and Atlantic Coastal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 26 Capital Acquisition and Atlantic Coastal Acquisition, you can compare the effects of market volatilities on 26 Capital and Atlantic Coastal 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 26 Capital with a short position of Atlantic Coastal. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26 Capital and Atlantic Coastal.

Diversification Opportunities for 26 Capital and Atlantic Coastal

-0.5

Correlation Coefficient

26 Capital  Atlantic Coastal

Very good diversification

The 3 months correlation between ADER and Atlantic is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding 26 Capital Acquisition and Atlantic Coastal Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Coastal Acq and 26 Capital 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 26 Capital Acquisition are associated (or correlated) with Atlantic Coastal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Coastal Acq has no effect on the direction of 26 Capital i.e., 26 Capital and Atlantic Coastal go up and down completely randomly.

Pair Corralation between 26 Capital and Atlantic Coastal

Given the investment horizon of 90 days 26 Capital Acquisition is expected to generate 0.22 times more return on investment than Atlantic Coastal. However, 26 Capital Acquisition is 4.47 times less risky than Atlantic Coastal. It trades about 0.15 of its potential returns per unit of risk. Atlantic Coastal Acquisition is currently generating about -0.03 per unit of risk. If you would invest  1,013  in 26 Capital Acquisition on September 14, 2024 and sell it today you would earn a total of  125.00  from holding 26 Capital Acquisition or generate 12.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.17%
Values	Daily Returns

26 Capital Acquisition  vs.  Atlantic Coastal Acquisition

26 Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 26 Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, 26 Capital is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Atlantic Coastal Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Coastal Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with 26 Capital and Atlantic Coastal

The main advantage of trading using opposite 26 Capital and Atlantic Coastal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26 Capital position performs unexpectedly, Atlantic Coastal 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 Atlantic Coastal will offset losses from the drop in Atlantic Coastal's long position.

The idea behind 26 Capital Acquisition and Atlantic Coastal Acquisition 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.