Correlation Between Alphabet and Axactor SE

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

Diversification Opportunities for Alphabet and Axactor SE

-0.71

Correlation Coefficient

Alphabet  Axactor SE

Pay attention - limited upside

The 3 months correlation between Alphabet and Axactor is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Axactor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axactor SE 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 Axactor SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axactor SE has no effect on the direction of Alphabet i.e., Alphabet and Axactor SE go up and down completely randomly.

Pair Corralation between Alphabet and Axactor SE

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.93 times more return on investment than Axactor SE. However, Alphabet Inc Class C is 1.07 times less risky than Axactor SE. It trades about 0.1 of its potential returns per unit of risk. Axactor SE is currently generating about -0.04 per unit of risk. If you would invest  8,949  in Alphabet Inc Class C on September 13, 2024 and sell it today you would earn a total of  10,722  from holding Alphabet Inc Class C or generate 119.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Alphabet Inc Class C  vs.  Axactor SE

Alphabet Class C

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 17 (%) 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.

Axactor SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axactor SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Alphabet and Axactor SE

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

The idea behind Alphabet Inc Class C and Axactor SE 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 Global Correlations module to find global opportunities by holding instruments from different markets.