Correlation Between AlphaTime Acquisition and Globalfoundries

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

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

Diversification Opportunities for AlphaTime Acquisition and Globalfoundries

0.67

Correlation Coefficient

AlphaTime Acquisition  Globalfoundries

Poor diversification

The 3 months correlation between AlphaTime and Globalfoundries is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding AlphaTime Acquisition Corp and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries and AlphaTime 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 AlphaTime Acquisition Corp are associated (or correlated) with Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of AlphaTime Acquisition i.e., AlphaTime Acquisition and Globalfoundries go up and down completely randomly.

Pair Corralation between AlphaTime Acquisition and Globalfoundries

Given the investment horizon of 90 days AlphaTime Acquisition is expected to generate 11.57 times less return on investment than Globalfoundries. But when comparing it to its historical volatility, AlphaTime Acquisition Corp is 26.22 times less risky than Globalfoundries. It trades about 0.15 of its potential returns per unit of risk. Globalfoundries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,919  in Globalfoundries on September 14, 2024 and sell it today you would earn a total of  458.00  from holding Globalfoundries or generate 11.69% return on investment over 90 days.

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

AlphaTime Acquisition Corp  vs.  Globalfoundries

AlphaTime Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaTime Acquisition Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, AlphaTime Acquisition is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Globalfoundries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Globalfoundries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AlphaTime Acquisition and Globalfoundries

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

The idea behind AlphaTime Acquisition Corp and Globalfoundries 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.