Correlation Between Alphabet and MTN GHANA
Can any of the company-specific risk be diversified away by investing in both Alphabet and MTN GHANA 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 MTN GHANA 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 MTN GHANA LTD, you can compare the effects of market volatilities on Alphabet and MTN GHANA 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 MTN GHANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and MTN GHANA.
Diversification Opportunities for Alphabet and MTN GHANA
Very weak diversification
The 3 months correlation between Alphabet and MTN is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and MTN GHANA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN GHANA LTD 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 MTN GHANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN GHANA LTD has no effect on the direction of Alphabet i.e., Alphabet and MTN GHANA go up and down completely randomly.
Pair Corralation between Alphabet and MTN GHANA
Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the MTN GHANA. In addition to that, Alphabet is 3.43 times more volatile than MTN GHANA LTD. It trades about -0.02 of its total potential returns per unit of risk. MTN GHANA LTD is currently generating about 0.29 per unit of volatility. If you would invest 229.00 in MTN GHANA LTD on September 2, 2024 and sell it today you would earn a total of 8.00 from holding MTN GHANA LTD or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Alphabet Inc Class C vs. MTN GHANA LTD
Performance |
| Timeline |
| Alphabet Class C |
| MTN GHANA LTD |
Alphabet and MTN GHANA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and MTN GHANA
The main advantage of trading using opposite Alphabet and MTN GHANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, MTN GHANA 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 MTN GHANA will offset losses from the drop in MTN GHANA's long position.The idea behind Alphabet Inc Class C and MTN GHANA LTD 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.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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