Correlation Between Alphabet and AGFA Gevaert

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

Diversification Opportunities for Alphabet and AGFA Gevaert

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Alphabet and AGFA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and AGFA Gevaert NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGFA Gevaert NV 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 AGFA Gevaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGFA Gevaert NV has no effect on the direction of Alphabet i.e., Alphabet and AGFA Gevaert go up and down completely randomly.

Pair Corralation between Alphabet and AGFA Gevaert

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.33 times more return on investment than AGFA Gevaert. However, Alphabet Inc Class C is 3.06 times less risky than AGFA Gevaert. It trades about -0.02 of its potential returns per unit of risk. AGFA Gevaert NV is currently generating about -0.15 per unit of risk. If you would invest  17,269  in Alphabet Inc Class C on September 1, 2024 and sell it today you would lose (220.00) from holding Alphabet Inc Class C or give up 1.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Alphabet Inc Class C  vs.  AGFA Gevaert NV

 Performance 
       Timeline  
Alphabet Class C 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in December 2024.
AGFA Gevaert NV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AGFA Gevaert NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Alphabet and AGFA Gevaert Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alphabet and AGFA Gevaert

The main advantage of trading using opposite Alphabet and AGFA Gevaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, AGFA Gevaert 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 AGFA Gevaert will offset losses from the drop in AGFA Gevaert's long position.
The idea behind Alphabet Inc Class C and AGFA Gevaert NV 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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