Correlation Between Embrace Change and AlphaTime Acquisition

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

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

Diversification Opportunities for Embrace Change and AlphaTime Acquisition

-0.01

Correlation Coefficient

Embrace Change  AlphaTime Acquisition

Good diversification

The 3 months correlation between Embrace and AlphaTime is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of Embrace Change i.e., Embrace Change and AlphaTime Acquisition go up and down completely randomly.

Pair Corralation between Embrace Change and AlphaTime Acquisition

Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 278.68 times more return on investment than AlphaTime Acquisition. However, Embrace Change is 278.68 times more volatile than AlphaTime Acquisition Corp. It trades about 0.11 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about 0.15 per unit of risk. If you would invest  2.97  in Embrace Change Acquisition on September 14, 2024 and sell it today you would lose (0.67) from holding Embrace Change Acquisition or give up 22.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	34.92%
Values	Daily Returns

Embrace Change Acquisition  vs.  AlphaTime Acquisition Corp

Embrace Change Acqui

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Embrace Change showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Embrace Change and AlphaTime Acquisition

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

The idea behind Embrace Change Acquisition and AlphaTime 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.