Correlation Between Eguana Technologies and Alphabet

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

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

Diversification Opportunities for Eguana Technologies and Alphabet

-0.14

Correlation Coefficient

Eguana Technologies  Alphabet

Good diversification

The 3 months correlation between Eguana and Alphabet is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Eguana Technologies and Alphabet Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet CDR and Eguana Technologies 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 Eguana Technologies 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 CDR has no effect on the direction of Eguana Technologies i.e., Eguana Technologies and Alphabet go up and down completely randomly.

Pair Corralation between Eguana Technologies and Alphabet

Assuming the 90 days horizon Eguana Technologies is expected to generate 18.74 times more return on investment than Alphabet. However, Eguana Technologies is 18.74 times more volatile than Alphabet Inc CDR. It trades about 0.17 of its potential returns per unit of risk. Alphabet Inc CDR is currently generating about -0.14 per unit of risk. If you would invest  1.00  in Eguana Technologies on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Eguana Technologies or generate 0.0% return on investment over 90 days.

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

Eguana Technologies  vs.  Alphabet Inc CDR

Eguana Technologies

Risk-Adjusted Performance

Good

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

Alphabet CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Eguana Technologies and Alphabet

The main advantage of trading using opposite Eguana Technologies and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eguana Technologies 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 Eguana Technologies and Alphabet Inc CDR 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.