Correlation Between Alphabet and Systemair

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

Diversification Opportunities for Alphabet and Systemair

0.2

Correlation Coefficient

Alphabet  Systemair

Modest diversification

The 3 months correlation between Alphabet and Systemair is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB 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 Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of Alphabet i.e., Alphabet and Systemair go up and down completely randomly.

Pair Corralation between Alphabet and Systemair

Given the investment horizon of 90 days Alphabet is expected to generate 1.85 times less return on investment than Systemair. But when comparing it to its historical volatility, Alphabet Inc Class C is 1.05 times less risky than Systemair. It trades about 0.08 of its potential returns per unit of risk. Systemair AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  7,960  in Systemair AB on September 2, 2024 and sell it today you would earn a total of  1,250  from holding Systemair AB or generate 15.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.97%
Values	Daily Returns

Alphabet Inc Class C  vs.  Systemair AB

Alphabet Class C

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 6 (%) 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.

Systemair AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Systemair unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and Systemair

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

The idea behind Alphabet Inc Class C and Systemair AB 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.