Correlation Between Alphabet and Ambase Corp

Can any of the company-specific risk be diversified away by investing in both Alphabet and Ambase Corp 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 Ambase Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alphabet Inc Class A and Ambase Corp, you can compare the effects of market volatilities on Alphabet and Ambase Corp 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 Ambase Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Ambase Corp.

Diversification Opportunities for Alphabet and Ambase Corp

-0.78

Correlation Coefficient

Alphabet  Ambase Corp

Pay attention - limited upside

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

Pair Corralation between Alphabet and Ambase Corp

Assuming the 90 days horizon Alphabet is expected to generate 5.73 times less return on investment than Ambase Corp. But when comparing it to its historical volatility, Alphabet Inc Class A is 3.22 times less risky than Ambase Corp. It trades about 0.04 of its potential returns per unit of risk. Ambase Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Ambase Corp on October 24, 2024 and sell it today you would earn a total of  1.00  from holding Ambase Corp or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Alphabet Inc Class A  vs.  Ambase Corp

Alphabet Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Alphabet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ambase Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alphabet and Ambase Corp

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

The idea behind Alphabet Inc Class A and Ambase Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.