Correlation Between Alphabet and ZKH Group
Can any of the company-specific risk be diversified away by investing in both Alphabet and ZKH Group 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 ZKH Group 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 ZKH Group Limited, you can compare the effects of market volatilities on Alphabet and ZKH Group 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 ZKH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and ZKH Group.
Diversification Opportunities for Alphabet and ZKH Group
Poor diversification
The 3 months correlation between Alphabet and ZKH is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and ZKH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKH Group Limited 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 ZKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKH Group Limited has no effect on the direction of Alphabet i.e., Alphabet and ZKH Group go up and down completely randomly.
Pair Corralation between Alphabet and ZKH Group
Given the investment horizon of 90 days Alphabet is expected to generate 4.63 times less return on investment than ZKH Group. But when comparing it to its historical volatility, Alphabet Inc Class C is 2.12 times less risky than ZKH Group. It trades about 0.04 of its potential returns per unit of risk. ZKH Group Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 290.00 in ZKH Group Limited on August 30, 2024 and sell it today you would earn a total of 52.00 from holding ZKH Group Limited or generate 17.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. ZKH Group Limited
Performance |
| Timeline |
| Alphabet Class C |
| ZKH Group Limited |
Alphabet and ZKH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and ZKH Group
The main advantage of trading using opposite Alphabet and ZKH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, ZKH Group 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 ZKH Group will offset losses from the drop in ZKH Group's long position.The idea behind Alphabet Inc Class C and ZKH Group Limited 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.| ZKH Group vs. NETGEAR | ZKH Group vs. Coupang LLC | ZKH Group vs. BCE Inc | ZKH Group vs. Meiwu Technology Co |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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