Correlation Between Shenzhen Investment and Alphabet
Can any of the company-specific risk be diversified away by investing in both Shenzhen Investment and Alphabet 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 Shenzhen Investment and Alphabet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenzhen Investment Holdings and Alphabet Inc Class A, you can compare the effects of market volatilities on Shenzhen Investment and Alphabet 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 Shenzhen Investment with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Investment and Alphabet.
Diversification Opportunities for Shenzhen Investment and Alphabet
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shenzhen and Alphabet is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Investment Holdings and Alphabet Inc Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A and Shenzhen Investment 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 Shenzhen Investment Holdings are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of Shenzhen Investment i.e., Shenzhen Investment and Alphabet go up and down completely randomly.
Pair Corralation between Shenzhen Investment and Alphabet
Assuming the 90 days horizon Shenzhen Investment is expected to generate 3.58 times less return on investment than Alphabet. But when comparing it to its historical volatility, Shenzhen Investment Holdings is 2.28 times less risky than Alphabet. It trades about 0.18 of its potential returns per unit of risk. Alphabet Inc Class A is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 23,404 in Alphabet Inc Class A on September 7, 2025 and sell it today you would earn a total of 8,723 from holding Alphabet Inc Class A or generate 37.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
Shenzhen Investment Holdings vs. Alphabet Inc Class A
Performance |
| Timeline |
| Shenzhen Investment |
| Alphabet Class A |
Shenzhen Investment and Alphabet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Investment and Alphabet
The main advantage of trading using opposite Shenzhen Investment and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Investment position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.| Shenzhen Investment vs. Transurban Group | Shenzhen Investment vs. Atlas Arteria Limited | Shenzhen Investment vs. Jiangsu Expressway Co | Shenzhen Investment vs. Jiangsu Expressway |
| Alphabet vs. Yokohama Rubber Co | Alphabet vs. British American Tobacco | Alphabet vs. Martin Marietta Materials | Alphabet vs. Solstice Advanced Materials, |
Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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