Correlation Between Alphabet and Samfine Creation

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

Diversification Opportunities for Alphabet and Samfine Creation

0.44

Correlation Coefficient

Alphabet  Samfine Creation

Very weak diversification

The 3 months correlation between Alphabet and Samfine is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Samfine Creation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samfine Creation Holdings 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 Samfine Creation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samfine Creation Holdings has no effect on the direction of Alphabet i.e., Alphabet and Samfine Creation go up and down completely randomly.

Pair Corralation between Alphabet and Samfine Creation

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.09 times more return on investment than Samfine Creation. However, Alphabet Inc Class C is 11.56 times less risky than Samfine Creation. It trades about 0.18 of its potential returns per unit of risk. Samfine Creation Holdings is currently generating about 0.01 per unit of risk. If you would invest  16,010  in Alphabet Inc Class C on September 17, 2024 and sell it today you would earn a total of  3,128  from holding Alphabet Inc Class C or generate 19.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	68.75%
Values	Daily Returns

Alphabet Inc Class C  vs.  Samfine Creation Holdings

Alphabet Class C

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 13 (%) 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.

Samfine Creation Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samfine Creation Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady technical indicators, Samfine Creation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and Samfine Creation

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

The idea behind Alphabet Inc Class C and Samfine Creation Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.