Correlation Between Alphabet and Unique Mining

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

Diversification Opportunities for Alphabet and Unique Mining

-0.47

Correlation Coefficient

Alphabet  Unique Mining

Very good diversification

The 3 months correlation between Alphabet and Unique is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Unique Mining Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unique Mining Services 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 Unique Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unique Mining Services has no effect on the direction of Alphabet i.e., Alphabet and Unique Mining go up and down completely randomly.

Pair Corralation between Alphabet and Unique Mining

Given the investment horizon of 90 days Alphabet is expected to generate 11.88 times less return on investment than Unique Mining. But when comparing it to its historical volatility, Alphabet Inc Class C is 26.36 times less risky than Unique Mining. It trades about 0.09 of its potential returns per unit of risk. Unique Mining Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  159.00  in Unique Mining Services on September 27, 2024 and sell it today you would lose (120.00) from holding Unique Mining Services or give up 75.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.65%
Values	Daily Returns

Alphabet Inc Class C  vs.  Unique Mining Services

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 weak basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Unique Mining Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unique Mining Services 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Alphabet and Unique Mining

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

The idea behind Alphabet Inc Class C and Unique Mining Services 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.