Correlation Between Technos SA and Alphabet

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

By analyzing existing cross correlation between Technos SA and Alphabet, you can compare the effects of market volatilities on Technos SA and Alphabet 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 Technos SA with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technos SA and Alphabet.

Diversification Opportunities for Technos SA and Alphabet

0.45

Correlation Coefficient

Technos SA  Alphabet

Very weak diversification

The 3 months correlation between Technos and Alphabet is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Technos SA and Alphabet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet and Technos SA 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 Technos SA are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Technos SA i.e., Technos SA and Alphabet go up and down completely randomly.

Pair Corralation between Technos SA and Alphabet

Assuming the 90 days trading horizon Technos SA is expected to generate 2.37 times less return on investment than Alphabet. In addition to that, Technos SA is 1.94 times more volatile than Alphabet. It trades about 0.06 of its total potential returns per unit of risk. Alphabet is currently generating about 0.27 per unit of volatility. If you would invest  7,287  in Alphabet on September 16, 2024 and sell it today you would earn a total of  2,420  from holding Alphabet or generate 33.21% return on investment over 90 days.

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

Technos SA  vs.  Alphabet

Technos SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Technos SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Technos SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alphabet

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Alphabet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak technical and fundamental indicators, Alphabet sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Technos SA and Alphabet

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

The idea behind Technos SA and Alphabet 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.