Correlation Between Alphabet and Sogeclair

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

Diversification Opportunities for Alphabet and Sogeclair

0.01

Correlation Coefficient

Alphabet  Sogeclair

Significant diversification

The 3 months correlation between Alphabet and Sogeclair is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Sogeclair SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sogeclair SA 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 Sogeclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sogeclair SA has no effect on the direction of Alphabet i.e., Alphabet and Sogeclair go up and down completely randomly.

Pair Corralation between Alphabet and Sogeclair

Given the investment horizon of 90 days Alphabet is expected to generate 12.97 times less return on investment than Sogeclair. In addition to that, Alphabet is 1.01 times more volatile than Sogeclair SA. It trades about 0.01 of its total potential returns per unit of risk. Sogeclair SA is currently generating about 0.1 per unit of volatility. If you would invest  1,785  in Sogeclair SA on December 1, 2024 and sell it today you would earn a total of  215.00  from holding Sogeclair SA or generate 12.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Alphabet Inc Class C  vs.  Sogeclair SA

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.

Sogeclair SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sogeclair SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sogeclair reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and Sogeclair

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

The idea behind Alphabet Inc Class C and Sogeclair SA 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.