Correlation Between Alphabet and Cerinnov Group

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

Diversification Opportunities for Alphabet and Cerinnov Group

-0.63

Correlation Coefficient

Alphabet  Cerinnov Group

Excellent diversification

The 3 months correlation between Alphabet and Cerinnov is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Cerinnov Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerinnov Group SA 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 Cerinnov Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerinnov Group SA has no effect on the direction of Alphabet i.e., Alphabet and Cerinnov Group go up and down completely randomly.

Pair Corralation between Alphabet and Cerinnov Group

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.24 times more return on investment than Cerinnov Group. However, Alphabet Inc Class C is 4.18 times less risky than Cerinnov Group. It trades about 0.34 of its potential returns per unit of risk. Cerinnov Group SA is currently generating about 0.02 per unit of risk. If you would invest  17,063  in Alphabet Inc Class C on September 28, 2024 and sell it today you would earn a total of  2,647  from holding Alphabet Inc Class C or generate 15.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Alphabet Inc Class C  vs.  Cerinnov Group SA

Alphabet Class C

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 12 (%) 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.

Cerinnov Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cerinnov Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Alphabet and Cerinnov Group

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

The idea behind Alphabet Inc Class C and Cerinnov Group SA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.