Correlation Between Alphabet and Impala Platinum

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

Diversification Opportunities for Alphabet and Impala Platinum

-0.66

Correlation Coefficient

Alphabet  Impala Platinum

Excellent diversification

The 3 months correlation between Alphabet and Impala is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Alphabet i.e., Alphabet and Impala Platinum go up and down completely randomly.

Pair Corralation between Alphabet and Impala Platinum

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.48 times more return on investment than Impala Platinum. However, Alphabet Inc Class C is 2.07 times less risky than Impala Platinum. It trades about 0.17 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.02 per unit of risk. If you would invest  16,429  in Alphabet Inc Class C on October 23, 2024 and sell it today you would earn a total of  3,326  from holding Alphabet Inc Class C or generate 20.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Alphabet Inc Class C  vs.  Impala Platinum Holdings

Alphabet Class C

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 13 (%) 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.

Impala Platinum Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impala Platinum Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Impala Platinum is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alphabet and Impala Platinum

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

The idea behind Alphabet Inc Class C and Impala Platinum Holdings 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 Stocks Directory module to find actively traded stocks across global markets.