Correlation Between Alphabet and Siam Steel

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

Diversification Opportunities for Alphabet and Siam Steel

-0.78

Correlation Coefficient

Alphabet  Siam Steel

Pay attention - limited upside

The 3 months correlation between Alphabet and Siam is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Siam Steel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siam Steel Service 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 Siam Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siam Steel Service has no effect on the direction of Alphabet i.e., Alphabet and Siam Steel go up and down completely randomly.

Pair Corralation between Alphabet and Siam Steel

Given the investment horizon of 90 days Alphabet is expected to generate 24.41 times less return on investment than Siam Steel. But when comparing it to its historical volatility, Alphabet Inc Class C is 37.74 times less risky than Siam Steel. It trades about 0.09 of its potential returns per unit of risk. Siam Steel Service is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  271.00  in Siam Steel Service on September 14, 2024 and sell it today you would lose (51.00) from holding Siam Steel Service or give up 18.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.39%
Values	Daily Returns

Alphabet Inc Class C  vs.  Siam Steel Service

Alphabet Class C

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 16 (%) 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.

Siam Steel Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siam Steel Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Alphabet and Siam Steel

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

The idea behind Alphabet Inc Class C and Siam Steel Service 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.