Correlation Between Safety Shot and Alpha One

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

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

Diversification Opportunities for Safety Shot and Alpha One

0.29

Correlation Coefficient

Safety Shot  Alpha One

Modest diversification

The 3 months correlation between Safety and Alpha is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot and Alpha One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha One and Safety Shot 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 Safety Shot are associated (or correlated) with Alpha One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha One has no effect on the direction of Safety Shot i.e., Safety Shot and Alpha One go up and down completely randomly.

Pair Corralation between Safety Shot and Alpha One

Given the investment horizon of 90 days Safety Shot is expected to generate 0.64 times more return on investment than Alpha One. However, Safety Shot is 1.56 times less risky than Alpha One. It trades about -0.08 of its potential returns per unit of risk. Alpha One is currently generating about -0.2 per unit of risk. If you would invest  85.00  in Safety Shot on September 26, 2024 and sell it today you would lose (9.00) from holding Safety Shot or give up 10.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Safety Shot  vs.  Alpha One

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Alpha One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Safety Shot and Alpha One

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

The idea behind Safety Shot and Alpha One 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.