Correlation Between Alphabet and AiMedia Technologies
Can any of the company-specific risk be diversified away by investing in both Alphabet and AiMedia Technologies 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 AiMedia Technologies 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 AiMedia Technologies, you can compare the effects of market volatilities on Alphabet and AiMedia Technologies 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 AiMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and AiMedia Technologies.
Diversification Opportunities for Alphabet and AiMedia Technologies
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alphabet and AiMedia is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and AiMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiMedia Technologies 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 AiMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiMedia Technologies has no effect on the direction of Alphabet i.e., Alphabet and AiMedia Technologies go up and down completely randomly.
Pair Corralation between Alphabet and AiMedia Technologies
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.34 times more return on investment than AiMedia Technologies. However, Alphabet Inc Class C is 2.97 times less risky than AiMedia Technologies. It trades about 0.03 of its potential returns per unit of risk. AiMedia Technologies is currently generating about 0.0 per unit of risk. If you would invest 16,364 in Alphabet Inc Class C on August 25, 2024 and sell it today you would earn a total of 293.00 from holding Alphabet Inc Class C or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. AiMedia Technologies
Performance |
| Timeline |
| Alphabet Class C |
| AiMedia Technologies |
Alphabet and AiMedia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and AiMedia Technologies
The main advantage of trading using opposite Alphabet and AiMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, AiMedia Technologies 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 AiMedia Technologies will offset losses from the drop in AiMedia Technologies' long position.The idea behind Alphabet Inc Class C and AiMedia Technologies 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.| AiMedia Technologies vs. Alto Metals | AiMedia Technologies vs. RLF AgTech | AiMedia Technologies vs. Readytech Holdings | AiMedia Technologies vs. Sky Metals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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