Correlation Between Alphabet and Niu Technologies

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

Diversification Opportunities for Alphabet and Niu Technologies

0.59

Correlation Coefficient

Alphabet  Niu Technologies

Very weak diversification

The 3 months correlation between Alphabet and Niu is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Niu Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niu Technologies 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 Niu Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niu Technologies has no effect on the direction of Alphabet i.e., Alphabet and Niu Technologies go up and down completely randomly.

Pair Corralation between Alphabet and Niu Technologies

Given the investment horizon of 90 days Alphabet is expected to generate 5.55 times less return on investment than Niu Technologies. But when comparing it to its historical volatility, Alphabet Inc Class C is 3.12 times less risky than Niu Technologies. It trades about 0.1 of its potential returns per unit of risk. Niu Technologies is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  176.00  in Niu Technologies on February 1, 2024 and sell it today you would earn a total of  51.00  from holding Niu Technologies or generate 28.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Alphabet Inc Class C  vs.  Niu Technologies

Alphabet Class C

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Niu Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Niu Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, Niu Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and Niu Technologies

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

The idea behind Alphabet Inc Class C and Niu Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.