Correlation Between Alphabet and INKON Life

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

Diversification Opportunities for Alphabet and INKON Life

0.6

Correlation Coefficient

Alphabet  INKON Life

Poor diversification

The 3 months correlation between Alphabet and INKON is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and INKON Life Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INKON Life Technology 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 INKON Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INKON Life Technology has no effect on the direction of Alphabet i.e., Alphabet and INKON Life go up and down completely randomly.

Pair Corralation between Alphabet and INKON Life

Given the investment horizon of 90 days Alphabet is expected to generate 2.04 times less return on investment than INKON Life. But when comparing it to its historical volatility, Alphabet Inc Class C is 2.59 times less risky than INKON Life. It trades about 0.18 of its potential returns per unit of risk. INKON Life Technology is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  717.00  in INKON Life Technology on September 15, 2024 and sell it today you would earn a total of  259.00  from holding INKON Life Technology or generate 36.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.63%
Values	Daily Returns

Alphabet Inc Class C  vs.  INKON Life Technology

Alphabet Class C

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

INKON Life Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INKON Life Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, INKON Life sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and INKON Life

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

The idea behind Alphabet Inc Class C and INKON Life Technology 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.