Correlation Between Alphabet and MiraeAsset TIGER

Can any of the company-specific risk be diversified away by investing in both Alphabet and MiraeAsset TIGER 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 MiraeAsset TIGER 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 MiraeAsset TIGER NIKKEI225, you can compare the effects of market volatilities on Alphabet and MiraeAsset TIGER 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 MiraeAsset TIGER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and MiraeAsset TIGER.

Diversification Opportunities for Alphabet and MiraeAsset TIGER

0.64

Correlation Coefficient

Alphabet  MiraeAsset TIGER

Poor diversification

The 3 months correlation between Alphabet and MiraeAsset is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and MiraeAsset TIGER NIKKEI225 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MiraeAsset TIGER NIK 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 MiraeAsset TIGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MiraeAsset TIGER NIK has no effect on the direction of Alphabet i.e., Alphabet and MiraeAsset TIGER go up and down completely randomly.

Pair Corralation between Alphabet and MiraeAsset TIGER

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the MiraeAsset TIGER. In addition to that, Alphabet is 1.32 times more volatile than MiraeAsset TIGER NIKKEI225. It trades about -0.09 of its total potential returns per unit of risk. MiraeAsset TIGER NIKKEI225 is currently generating about -0.04 per unit of volatility. If you would invest  2,198,545  in MiraeAsset TIGER NIKKEI225 on October 15, 2024 and sell it today you would lose (20,545) from holding MiraeAsset TIGER NIKKEI225 or give up 0.93% of portfolio value over 90 days.

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

Alphabet Inc Class C  vs.  MiraeAsset TIGER NIKKEI225

Alphabet Class C

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

MiraeAsset TIGER NIK

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days MiraeAsset TIGER NIKKEI225 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MiraeAsset TIGER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphabet and MiraeAsset TIGER

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

The idea behind Alphabet Inc Class C and MiraeAsset TIGER NIKKEI225 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.