Correlation Between Alphabet and Applied Opt

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

Diversification Opportunities for Alphabet and Applied Opt

0.19

Correlation Coefficient

Alphabet  Applied Opt

Average diversification

The 3 months correlation between Alphabet and Applied is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A and Applied Opt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Opt 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 Applied Opt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Opt has no effect on the direction of Alphabet i.e., Alphabet and Applied Opt go up and down completely randomly.

Pair Corralation between Alphabet and Applied Opt

Assuming the 90 days horizon Alphabet Inc Class A is expected to generate 0.29 times more return on investment than Applied Opt. However, Alphabet Inc Class A is 3.44 times less risky than Applied Opt. It trades about 0.28 of its potential returns per unit of risk. Applied Opt is currently generating about -0.02 per unit of risk. If you would invest  20,830  in Alphabet Inc Class A on August 23, 2025 and sell it today you would earn a total of  8,451  from holding Alphabet Inc Class A or generate 40.57% return on investment over 90 days.

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

Alphabet Inc Class A  vs.  Applied Opt

Alphabet Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Alphabet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Applied Opt

Risk-Adjusted Performance

Weakest

Over the last 90 days Applied Opt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Alphabet and Applied Opt

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

The idea behind Alphabet Inc Class A and Applied Opt 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.