Correlation Between Alphabet and Ashmore Group

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

Diversification Opportunities for Alphabet and Ashmore Group

0.77

Correlation Coefficient

Alphabet  Ashmore Group

Poor diversification

The 3 months correlation between Alphabet and Ashmore is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Ashmore Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Group Plc 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 Ashmore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Group Plc has no effect on the direction of Alphabet i.e., Alphabet and Ashmore Group go up and down completely randomly.

Pair Corralation between Alphabet and Ashmore Group

If you would invest  18,176  in Alphabet Inc Class C on September 12, 2024 and sell it today you would earn a total of  477.00  from holding Alphabet Inc Class C or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Alphabet Inc Class C  vs.  Ashmore Group Plc

Alphabet Class C

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 18 (%) 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.

Ashmore Group Plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ashmore Group Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ashmore Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and Ashmore Group

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

The idea behind Alphabet Inc Class C and Ashmore Group Plc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.