Correlation Between Alphabet and Yuanta STOXX

Can any of the company-specific risk be diversified away by investing in both Alphabet and Yuanta STOXX 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 Yuanta STOXX 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 Yuanta STOXX Global, you can compare the effects of market volatilities on Alphabet and Yuanta STOXX 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 Yuanta STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Yuanta STOXX.

Diversification Opportunities for Alphabet and Yuanta STOXX

0.82

Correlation Coefficient

Alphabet  Yuanta STOXX

Very poor diversification

The 3 months correlation between Alphabet and Yuanta is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Yuanta STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta STOXX Global 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 Yuanta STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta STOXX Global has no effect on the direction of Alphabet i.e., Alphabet and Yuanta STOXX go up and down completely randomly.

Pair Corralation between Alphabet and Yuanta STOXX

Given the investment horizon of 90 days Alphabet is expected to generate 1.99 times less return on investment than Yuanta STOXX. In addition to that, Alphabet is 1.17 times more volatile than Yuanta STOXX Global. It trades about 0.1 of its total potential returns per unit of risk. Yuanta STOXX Global is currently generating about 0.23 per unit of volatility. If you would invest  5,890  in Yuanta STOXX Global on September 3, 2024 and sell it today you would earn a total of  1,170  from holding Yuanta STOXX Global or generate 19.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Alphabet Inc Class C  vs.  Yuanta STOXX Global

Alphabet Class C

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yuanta STOXX Global

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta STOXX Global are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Yuanta STOXX unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and Yuanta STOXX

The main advantage of trading using opposite Alphabet and Yuanta STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Yuanta STOXX 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 Yuanta STOXX will offset losses from the drop in Yuanta STOXX's long position.

The idea behind Alphabet Inc Class C and Yuanta STOXX Global 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.