Correlation Between Alphabet and GPT

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

Diversification Opportunities for Alphabet and GPT

-0.79

Correlation Coefficient

Alphabet  GPT

Pay attention - limited upside

The 3 months correlation between Alphabet and GPT is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and GPT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Group 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 GPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Group has no effect on the direction of Alphabet i.e., Alphabet and GPT go up and down completely randomly.

Pair Corralation between Alphabet and GPT

Given the investment horizon of 90 days Alphabet is expected to generate 7.73 times less return on investment than GPT. But when comparing it to its historical volatility, Alphabet Inc Class C is 1.67 times less risky than GPT. It trades about 0.01 of its potential returns per unit of risk. GPT Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  232.00  in GPT Group on October 4, 2024 and sell it today you would earn a total of  27.00  from holding GPT Group or generate 11.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Alphabet Inc Class C  vs.  GPT Group

Alphabet Class C

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 9 (%) 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.

GPT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Alphabet and GPT

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

The idea behind Alphabet Inc Class C and GPT Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.