Correlation Between AltEnergy Acquisition and Altimar Acquisition

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

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

Diversification Opportunities for AltEnergy Acquisition and Altimar Acquisition

-0.31

Correlation Coefficient

AltEnergy Acquisition  Altimar Acquisition

Very good diversification

The 3 months correlation between AltEnergy and Altimar is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AltEnergy Acquisition Corp and Altimar Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altimar Acquisition Corp and AltEnergy 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 AltEnergy Acquisition Corp are associated (or correlated) with Altimar Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altimar Acquisition Corp has no effect on the direction of AltEnergy Acquisition i.e., AltEnergy Acquisition and Altimar Acquisition go up and down completely randomly.

Pair Corralation between AltEnergy Acquisition and Altimar Acquisition

Assuming the 90 days horizon AltEnergy Acquisition Corp is expected to generate 104.39 times more return on investment than Altimar Acquisition. However, AltEnergy Acquisition is 104.39 times more volatile than Altimar Acquisition Corp. It trades about 0.08 of its potential returns per unit of risk. Altimar Acquisition Corp is currently generating about 0.04 per unit of risk. If you would invest  13.00  in AltEnergy Acquisition Corp on February 16, 2024 and sell it today you would lose (6.99) from holding AltEnergy Acquisition Corp or give up 53.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

AltEnergy Acquisition Corp  vs.  Altimar Acquisition Corp

AltEnergy Acquisition

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AltEnergy Acquisition Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, AltEnergy Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Altimar Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altimar Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Altimar Acquisition is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AltEnergy Acquisition and Altimar Acquisition

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

The idea behind AltEnergy Acquisition Corp and Altimar 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.