Correlation Between Alphabet and Keyware Technologies

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

Diversification Opportunities for Alphabet and Keyware Technologies

0.22

Correlation Coefficient

Alphabet  Keyware Technologies

Modest diversification

The 3 months correlation between Alphabet and Keyware is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Keyware Technologies NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyware Technologies 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 Keyware Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyware Technologies has no effect on the direction of Alphabet i.e., Alphabet and Keyware Technologies go up and down completely randomly.

Pair Corralation between Alphabet and Keyware Technologies

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Keyware Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Alphabet Inc Class C is 1.17 times less risky than Keyware Technologies. The stock trades about -0.16 of its potential returns per unit of risk. The Keyware Technologies NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  78.00  in Keyware Technologies NV on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Keyware Technologies NV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Alphabet Inc Class C  vs.  Keyware Technologies NV

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.

Keyware Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keyware Technologies NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Keyware Technologies is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Alphabet and Keyware Technologies

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

The idea behind Alphabet Inc Class C and Keyware Technologies NV 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.