Correlation Between Alphabet and Ma Kuang

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

Diversification Opportunities for Alphabet and Ma Kuang

-0.34

Correlation Coefficient

Alphabet  Ma Kuang

Very good diversification

The 3 months correlation between Alphabet and 4139 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare 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 Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of Alphabet i.e., Alphabet and Ma Kuang go up and down completely randomly.

Pair Corralation between Alphabet and Ma Kuang

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 2.33 times more return on investment than Ma Kuang. However, Alphabet is 2.33 times more volatile than Ma Kuang Healthcare. It trades about 0.19 of its potential returns per unit of risk. Ma Kuang Healthcare is currently generating about -0.01 per unit of risk. If you would invest  18,029  in Alphabet Inc Class C on September 14, 2024 and sell it today you would earn a total of  1,642  from holding Alphabet Inc Class C or generate 9.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Alphabet Inc Class C  vs.  Ma Kuang Healthcare

Alphabet Class C

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Ma Kuang Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ma Kuang Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ma Kuang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Alphabet and Ma Kuang

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

The idea behind Alphabet Inc Class C and Ma Kuang Healthcare 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.