Correlation Between Inflection Point and Aldel Financial

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

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

Diversification Opportunities for Inflection Point and Aldel Financial

0.1

Correlation Coefficient

Inflection Point  Aldel Financial

Average diversification

The 3 months correlation between Inflection and Aldel is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II and Inflection Point 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 Inflection Point Acquisition are associated (or correlated) with Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Inflection Point i.e., Inflection Point and Aldel Financial go up and down completely randomly.

Pair Corralation between Inflection Point and Aldel Financial

Assuming the 90 days horizon Inflection Point Acquisition is expected to generate 1.7 times more return on investment than Aldel Financial. However, Inflection Point is 1.7 times more volatile than Aldel Financial II. It trades about 0.2 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.0 per unit of risk. If you would invest  1,075  in Inflection Point Acquisition on September 3, 2024 and sell it today you would earn a total of  25.00  from holding Inflection Point Acquisition or generate 2.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	45.31%
Values	Daily Returns

Inflection Point Acquisition  vs.  Aldel Financial II

Inflection Point Acq

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Inflection Point is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Aldel Financial II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aldel Financial II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Inflection Point and Aldel Financial

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

The idea behind Inflection Point Acquisition and Aldel Financial II 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.