Correlation Between Alphabet and Kaulin Mfg

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

By analyzing existing cross correlation between Alphabet Inc Class C and Kaulin Mfg, you can compare the effects of market volatilities on Alphabet and Kaulin Mfg 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 Kaulin Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Kaulin Mfg.

Diversification Opportunities for Alphabet and Kaulin Mfg

-0.67

Correlation Coefficient

Alphabet  Kaulin Mfg

Excellent diversification

The 3 months correlation between Alphabet and Kaulin is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Kaulin Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaulin Mfg 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 Class C are associated (or correlated) with Kaulin Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaulin Mfg has no effect on the direction of Alphabet i.e., Alphabet and Kaulin Mfg go up and down completely randomly.

Pair Corralation between Alphabet and Kaulin Mfg

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Kaulin Mfg. In addition to that, Alphabet is 2.73 times more volatile than Kaulin Mfg. It trades about -0.36 of its total potential returns per unit of risk. Kaulin Mfg is currently generating about 0.5 per unit of volatility. If you would invest  1,330  in Kaulin Mfg on December 4, 2024 and sell it today you would earn a total of  105.00  from holding Kaulin Mfg or generate 7.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Alphabet Inc Class C  vs.  Kaulin Mfg

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alphabet is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Kaulin Mfg

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaulin Mfg 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 fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Alphabet and Kaulin Mfg

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

The idea behind Alphabet Inc Class C and Kaulin Mfg 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.