Correlation Between Alphabet and Lu Hai
Can any of the company-specific risk be diversified away by investing in both Alphabet and Lu Hai 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 Lu Hai 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 Lu Hai Holding, you can compare the effects of market volatilities on Alphabet and Lu Hai 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 Lu Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Lu Hai.
Diversification Opportunities for Alphabet and Lu Hai
Excellent diversification
The 3 months correlation between Alphabet and 2115 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Lu Hai Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lu Hai Holding 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 Lu Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lu Hai Holding has no effect on the direction of Alphabet i.e., Alphabet and Lu Hai go up and down completely randomly.
Pair Corralation between Alphabet and Lu Hai
Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Lu Hai. In addition to that, Alphabet is 3.8 times more volatile than Lu Hai Holding. It trades about -0.2 of its total potential returns per unit of risk. Lu Hai Holding is currently generating about 0.34 per unit of volatility. If you would invest 2,945 in Lu Hai Holding on November 28, 2024 and sell it today you would earn a total of 100.00 from holding Lu Hai Holding or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Lu Hai Holding
Performance |
| Timeline |
| Alphabet Class C |
| Lu Hai Holding |
Alphabet and Lu Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Lu Hai
The main advantage of trading using opposite Alphabet and Lu Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Lu Hai 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 Lu Hai will offset losses from the drop in Lu Hai's long position.The idea behind Alphabet Inc Class C and Lu Hai Holding 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.| Lu Hai vs. Chunghwa Chemical Synthesis | Lu Hai vs. Sanyang Motor Co | Lu Hai vs. Turvo International Co | Lu Hai vs. Iron Force Industrial |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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