Correlation Between Alphabet and FG Group

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

Diversification Opportunities for Alphabet and FG Group

-0.18

Correlation Coefficient

Alphabet  FG Group

Good diversification

The 3 months correlation between Alphabet and FGH is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A and FG Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Group Holdings 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 FG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Group Holdings has no effect on the direction of Alphabet i.e., Alphabet and FG Group go up and down completely randomly.

Pair Corralation between Alphabet and FG Group

If you would invest  19,560  in Alphabet Inc Class A on October 26, 2024 and sell it today you would earn a total of  434.00  from holding Alphabet Inc Class A or generate 2.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Alphabet Inc Class A  vs.  FG Group Holdings

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.

FG Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FG Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, FG Group is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alphabet and FG Group

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

The idea behind Alphabet Inc Class A and FG Group Holdings 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.