Correlation Between Alphabet and Song Hong
Can any of the company-specific risk be diversified away by investing in both Alphabet and Song Hong 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 Song Hong 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 Song Hong Aluminum, you can compare the effects of market volatilities on Alphabet and Song Hong 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 Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Song Hong.
Diversification Opportunities for Alphabet and Song Hong
Excellent diversification
The 3 months correlation between Alphabet and Song is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Song Hong Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Aluminum 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 Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Aluminum has no effect on the direction of Alphabet i.e., Alphabet and Song Hong go up and down completely randomly.
Pair Corralation between Alphabet and Song Hong
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.68 times more return on investment than Song Hong. However, Alphabet Inc Class C is 1.47 times less risky than Song Hong. It trades about -0.07 of its potential returns per unit of risk. Song Hong Aluminum is currently generating about -0.1 per unit of risk. If you would invest 17,614 in Alphabet Inc Class C on August 31, 2024 and sell it today you would lose (565.00) from holding Alphabet Inc Class C or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Song Hong Aluminum
Performance |
| Timeline |
| Alphabet Class C |
| Song Hong Aluminum |
Alphabet and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Song Hong
The main advantage of trading using opposite Alphabet and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Song Hong 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 Song Hong will offset losses from the drop in Song Hong's long position.The idea behind Alphabet Inc Class C and Song Hong Aluminum 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.| Song Hong vs. FIT INVEST JSC | Song Hong vs. Damsan JSC | Song Hong vs. An Phat Plastic | Song Hong vs. Alphanam ME |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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