Correlation Between Hennessy Capital and AlphaTime Acquisition

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

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

Diversification Opportunities for Hennessy Capital and AlphaTime Acquisition

-0.42

Correlation Coefficient

Hennessy Capital  AlphaTime Acquisition

Very good diversification

The 3 months correlation between Hennessy and AlphaTime is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Capital Investment and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition and Hennessy 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 Hennessy Capital Investment 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 Hennessy Capital i.e., Hennessy Capital and AlphaTime Acquisition go up and down completely randomly.

Pair Corralation between Hennessy Capital and AlphaTime Acquisition

Given the investment horizon of 90 days Hennessy Capital is expected to generate 4.43 times less return on investment than AlphaTime Acquisition. In addition to that, Hennessy Capital is 12.09 times more volatile than AlphaTime Acquisition Corp. It trades about 0.0 of its total potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about 0.15 per unit of volatility. If you would invest  1,120  in AlphaTime Acquisition Corp on September 15, 2024 and sell it today you would earn a total of  14.00  from holding AlphaTime Acquisition Corp or generate 1.25% return on investment over 90 days.

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

Hennessy Capital Investment  vs.  AlphaTime Acquisition Corp

Hennessy Capital Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hennessy Capital Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Hennessy Capital is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hennessy Capital and AlphaTime Acquisition

The main advantage of trading using opposite Hennessy Capital and AlphaTime Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Capital 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 Hennessy Capital Investment 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.