Correlation Between Alphabet and Aptose Biosciences

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

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

Diversification Opportunities for Alphabet and Aptose Biosciences

-0.46

Correlation Coefficient

Alphabet  Aptose Biosciences

Very good diversification

The 3 months correlation between Alphabet and Aptose is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc CDR and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences and Alphabet 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 Alphabet Inc CDR are associated (or correlated) with Aptose Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptose Biosciences has no effect on the direction of Alphabet i.e., Alphabet and Aptose Biosciences go up and down completely randomly.

Pair Corralation between Alphabet and Aptose Biosciences

Assuming the 90 days trading horizon Alphabet is expected to generate 8.61 times less return on investment than Aptose Biosciences. But when comparing it to its historical volatility, Alphabet Inc CDR is 25.29 times less risky than Aptose Biosciences. It trades about 0.08 of its potential returns per unit of risk. Aptose Biosciences is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,350  in Aptose Biosciences on October 11, 2024 and sell it today you would lose (1,319) from holding Aptose Biosciences or give up 97.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.79%
Values	Daily Returns

Alphabet Inc CDR  vs.  Aptose Biosciences

Alphabet CDR

Risk-Adjusted Performance

12 of 100

Good

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

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptose Biosciences 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 basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Alphabet and Aptose Biosciences

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

The idea behind Alphabet Inc CDR and Aptose Biosciences 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.