Correlation Between Alphabet and BKS Bank

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

Diversification Opportunities for Alphabet and BKS Bank

-0.84

Correlation Coefficient

Alphabet  BKS Bank

Pay attention - limited upside

The 3 months correlation between Alphabet and BKS is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and BKS Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKS Bank AG 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 BKS Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKS Bank AG has no effect on the direction of Alphabet i.e., Alphabet and BKS Bank go up and down completely randomly.

Pair Corralation between Alphabet and BKS Bank

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the BKS Bank. In addition to that, Alphabet is 1.86 times more volatile than BKS Bank AG. It trades about -0.12 of its total potential returns per unit of risk. BKS Bank AG is currently generating about 0.02 per unit of volatility. If you would invest  1,590  in BKS Bank AG on December 29, 2024 and sell it today you would earn a total of  20.00  from holding BKS Bank AG or generate 1.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Alphabet Inc Class C  vs.  BKS Bank AG

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BKS Bank AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BKS Bank AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BKS Bank is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alphabet and BKS Bank

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

The idea behind Alphabet Inc Class C and BKS Bank AG 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.