Correlation Between Alphabet and Shinhan Inverse

Can any of the company-specific risk be diversified away by investing in both Alphabet and Shinhan Inverse 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 Shinhan Inverse into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alphabet Inc Class A and Shinhan Inverse WTI, you can compare the effects of market volatilities on Alphabet and Shinhan Inverse 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 Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Shinhan Inverse.

Diversification Opportunities for Alphabet and Shinhan Inverse

-0.06

Correlation Coefficient

Alphabet  Shinhan Inverse

Good diversification

The 3 months correlation between Alphabet and Shinhan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A and Shinhan Inverse WTI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse WTI 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 A are associated (or correlated) with Shinhan Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Inverse WTI has no effect on the direction of Alphabet i.e., Alphabet and Shinhan Inverse go up and down completely randomly.

Pair Corralation between Alphabet and Shinhan Inverse

Assuming the 90 days trading horizon Alphabet Inc Class A is expected to generate 0.86 times more return on investment than Shinhan Inverse. However, Alphabet Inc Class A is 1.17 times less risky than Shinhan Inverse. It trades about 0.22 of its potential returns per unit of risk. Shinhan Inverse WTI is currently generating about -0.03 per unit of risk. If you would invest  300,536  in Alphabet Inc Class A on September 12, 2024 and sell it today you would earn a total of  72,460  from holding Alphabet Inc Class A or generate 24.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Alphabet Inc Class A  vs.  Shinhan Inverse WTI

Alphabet Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Alphabet displayed solid returns over the last few months and may actually be approaching a breakup point.

Shinhan Inverse WTI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shinhan Inverse WTI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shinhan Inverse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphabet and Shinhan Inverse

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

The idea behind Alphabet Inc Class A and Shinhan Inverse WTI 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.