Correlation Between Alphabet and SANTAN

Can any of the company-specific risk be diversified away by investing in both Alphabet and SANTAN 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 SANTAN 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 SANTAN 3225 22 NOV 32, you can compare the effects of market volatilities on Alphabet and SANTAN 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 SANTAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and SANTAN.

Diversification Opportunities for Alphabet and SANTAN

0.6

Correlation Coefficient

Alphabet  SANTAN

Poor diversification

The 3 months correlation between Alphabet and SANTAN is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A and SANTAN 3225 22 NOV 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTAN 3225 22 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 SANTAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTAN 3225 22 has no effect on the direction of Alphabet i.e., Alphabet and SANTAN go up and down completely randomly.

Pair Corralation between Alphabet and SANTAN

Assuming the 90 days horizon Alphabet Inc Class A is expected to generate 0.59 times more return on investment than SANTAN. However, Alphabet Inc Class A is 1.69 times less risky than SANTAN. It trades about 0.18 of its potential returns per unit of risk. SANTAN 3225 22 NOV 32 is currently generating about -0.17 per unit of risk. If you would invest  16,167  in Alphabet Inc Class A on October 9, 2024 and sell it today you would earn a total of  3,382  from holding Alphabet Inc Class A or generate 20.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	67.74%
Values	Daily Returns

Alphabet Inc Class A  vs.  SANTAN 3225 22 NOV 32

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.

SANTAN 3225 22

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SANTAN 3225 22 NOV 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for SANTAN 3225 22 NOV 32 investors.

Pair Trading with Alphabet and SANTAN

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

The idea behind Alphabet Inc Class A and SANTAN 3225 22 NOV 32 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.