Correlation Between Alphabet and SG Capital
Can any of the company-specific risk be diversified away by investing in both Alphabet and SG Capital 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 SG Capital 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 SG Capital PCL, you can compare the effects of market volatilities on Alphabet and SG Capital 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 SG Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and SG Capital.
Diversification Opportunities for Alphabet and SG Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alphabet and SGC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and SG Capital PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SG Capital PCL 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 SG Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SG Capital PCL has no effect on the direction of Alphabet i.e., Alphabet and SG Capital go up and down completely randomly.
Pair Corralation between Alphabet and SG Capital
Given the investment horizon of 90 days Alphabet is expected to generate 6.48 times less return on investment than SG Capital. But when comparing it to its historical volatility, Alphabet Inc Class C is 3.13 times less risky than SG Capital. It trades about 0.01 of its potential returns per unit of risk. SG Capital PCL is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 132.00 in SG Capital PCL on September 3, 2024 and sell it today you would lose (1.00) from holding SG Capital PCL or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.95% |
| Values | Daily Returns |
Alphabet Inc Class C vs. SG Capital PCL
Performance |
| Timeline |
| Alphabet Class C |
| SG Capital PCL |
Alphabet and SG Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and SG Capital
The main advantage of trading using opposite Alphabet and SG Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, SG Capital 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 SG Capital will offset losses from the drop in SG Capital's long position.The idea behind Alphabet Inc Class C and SG Capital PCL 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.| SG Capital vs. Delta Electronics Public | SG Capital vs. Delta Electronics Public | SG Capital vs. Airports of Thailand | SG Capital vs. Airports of Thailand |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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