Correlation Between Alphabet and Asian Hotels

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

Diversification Opportunities for Alphabet and Asian Hotels

0.74

Correlation Coefficient

Alphabet  Asian Hotels

Poor diversification

The 3 months correlation between Alphabet and Asian is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Asian Hotels and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Hotels 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 Asian Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Hotels has no effect on the direction of Alphabet i.e., Alphabet and Asian Hotels go up and down completely randomly.

Pair Corralation between Alphabet and Asian Hotels

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Asian Hotels. In addition to that, Alphabet is 1.12 times more volatile than Asian Hotels and. It trades about -0.15 of its total potential returns per unit of risk. Asian Hotels and is currently generating about -0.15 per unit of volatility. If you would invest  6,350  in Asian Hotels and on December 31, 2024 and sell it today you would lose (990.00) from holding Asian Hotels and or give up 15.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.44%
Values	Daily Returns

Alphabet Inc Class C  vs.  Asian Hotels and

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 conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Asian Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asian Hotels and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alphabet and Asian Hotels

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

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