Correlation Between Alphabet and KPJ Healthcare

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

Diversification Opportunities for Alphabet and KPJ Healthcare

0.53

Correlation Coefficient

Alphabet  KPJ Healthcare

Very weak diversification

The 3 months correlation between Alphabet and KPJ is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and KPJ Healthcare Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPJ Healthcare Bhd 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 KPJ Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPJ Healthcare Bhd has no effect on the direction of Alphabet i.e., Alphabet and KPJ Healthcare go up and down completely randomly.

Pair Corralation between Alphabet and KPJ Healthcare

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.91 times more return on investment than KPJ Healthcare. However, Alphabet Inc Class C is 1.1 times less risky than KPJ Healthcare. It trades about 0.19 of its potential returns per unit of risk. KPJ Healthcare Bhd is currently generating about 0.13 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 Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Alphabet Inc Class C  vs.  KPJ Healthcare Bhd

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.

KPJ Healthcare Bhd

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KPJ Healthcare Bhd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, KPJ Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and KPJ Healthcare

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

The idea behind Alphabet Inc Class C and KPJ Healthcare Bhd 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.