Correlation Between Alphabet and Kingfisher PLC

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

Diversification Opportunities for Alphabet and Kingfisher PLC

-0.65

Correlation Coefficient

Alphabet  Kingfisher PLC

Excellent diversification

The 3 months correlation between Alphabet and Kingfisher is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Kingfisher PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher 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 Kingfisher PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher PLC has no effect on the direction of Alphabet i.e., Alphabet and Kingfisher PLC go up and down completely randomly.

Pair Corralation between Alphabet and Kingfisher PLC

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Kingfisher PLC. But the stock apears to be less risky and, when comparing its historical volatility, Alphabet Inc Class C is 1.23 times less risky than Kingfisher PLC. The stock trades about -0.12 of its potential returns per unit of risk. The Kingfisher PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  24,550  in Kingfisher PLC on December 29, 2024 and sell it today you would earn a total of  600.00  from holding Kingfisher PLC or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

Alphabet Inc Class C  vs.  Kingfisher PLC

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.

Kingfisher PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfisher PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Kingfisher PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alphabet and Kingfisher PLC

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

The idea behind Alphabet Inc Class C and Kingfisher 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.