Correlation Between Alphabet and Cathay Pacific
Can any of the company-specific risk be diversified away by investing in both Alphabet and Cathay Pacific 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 Cathay Pacific 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 Cathay Pacific Airways, you can compare the effects of market volatilities on Alphabet and Cathay Pacific 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 Cathay Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Cathay Pacific.
Diversification Opportunities for Alphabet and Cathay Pacific
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alphabet and Cathay is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Cathay Pacific Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Pacific Airways 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 Cathay Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Pacific Airways has no effect on the direction of Alphabet i.e., Alphabet and Cathay Pacific go up and down completely randomly.
Pair Corralation between Alphabet and Cathay Pacific
If you would invest 16,453 in Alphabet Inc Class C on August 25, 2024 and sell it today you would earn a total of 204.00 from holding Alphabet Inc Class C or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Cathay Pacific Airways
Performance |
| Timeline |
| Alphabet Class C |
| Cathay Pacific Airways |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Alphabet and Cathay Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Cathay Pacific
The main advantage of trading using opposite Alphabet and Cathay Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Cathay Pacific 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 Cathay Pacific will offset losses from the drop in Cathay Pacific's long position.The idea behind Alphabet Inc Class C and Cathay Pacific Airways 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.| Cathay Pacific vs. Finnair Oyj | Cathay Pacific vs. easyJet plc | Cathay Pacific vs. Norse Atlantic ASA | Cathay Pacific vs. Air New Zealand |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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