Correlation Between Alphabet and PENINSULA ENERG

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

Diversification Opportunities for Alphabet and PENINSULA ENERG

-0.63

Correlation Coefficient

Alphabet  PENINSULA ENERG

Excellent diversification

The 3 months correlation between Alphabet and PENINSULA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and PENINSULA ENERG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENINSULA ENERG 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 PENINSULA ENERG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENINSULA ENERG has no effect on the direction of Alphabet i.e., Alphabet and PENINSULA ENERG go up and down completely randomly.

Pair Corralation between Alphabet and PENINSULA ENERG

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.38 times more return on investment than PENINSULA ENERG. However, Alphabet Inc Class C is 2.64 times less risky than PENINSULA ENERG. It trades about 0.3 of its potential returns per unit of risk. PENINSULA ENERG is currently generating about 0.07 per unit of risk. If you would invest  16,905  in Alphabet Inc Class C on September 22, 2024 and sell it today you would earn a total of  2,391  from holding Alphabet Inc Class C or generate 14.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Alphabet Inc Class C  vs.  PENINSULA ENERG

Alphabet Class C

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

PENINSULA ENERG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENINSULA ENERG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alphabet and PENINSULA ENERG

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

The idea behind Alphabet Inc Class C and PENINSULA ENERG 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.