Correlation Between Kanzhun and Alphabet

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

By analyzing existing cross correlation between Kanzhun Ltd ADR and Alphabet Inc Class A, you can compare the effects of market volatilities on Kanzhun and Alphabet 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 Kanzhun with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kanzhun and Alphabet.

Diversification Opportunities for Kanzhun and Alphabet

-0.43

Correlation Coefficient

Kanzhun  Alphabet

Very good diversification

The 3 months correlation between Kanzhun and Alphabet is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kanzhun Ltd ADR and Alphabet Inc Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A and Kanzhun 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 Kanzhun Ltd ADR are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of Kanzhun i.e., Kanzhun and Alphabet go up and down completely randomly.

Pair Corralation between Kanzhun and Alphabet

Allowing for the 90-day total investment horizon Kanzhun is expected to generate 7.23 times less return on investment than Alphabet. In addition to that, Kanzhun is 1.5 times more volatile than Alphabet Inc Class A. It trades about 0.02 of its total potential returns per unit of risk. Alphabet Inc Class A is currently generating about 0.24 per unit of volatility. If you would invest  17,244  in Alphabet Inc Class A on October 6, 2024 and sell it today you would earn a total of  1,935  from holding Alphabet Inc Class A or generate 11.22% return on investment over 90 days.

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

Kanzhun Ltd ADR  vs.  Alphabet Inc Class A

Kanzhun Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kanzhun Ltd ADR 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 fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alphabet Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Alphabet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kanzhun and Alphabet

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

The idea behind Kanzhun Ltd ADR and Alphabet Inc Class A 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.