Correlation Between Alibaba Group and Appian Corp
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Appian Corp 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 Alibaba Group and Appian Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Appian Corp, you can compare the effects of market volatilities on Alibaba Group and Appian Corp 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 Alibaba Group with a short position of Appian Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Appian Corp.
Diversification Opportunities for Alibaba Group and Appian Corp
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alibaba and Appian is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Appian Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appian Corp and Alibaba Group 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 Alibaba Group Holding are associated (or correlated) with Appian Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appian Corp has no effect on the direction of Alibaba Group i.e., Alibaba Group and Appian Corp go up and down completely randomly.
Pair Corralation between Alibaba Group and Appian Corp
Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 0.66 times more return on investment than Appian Corp. However, Alibaba Group Holding is 1.52 times less risky than Appian Corp. It trades about 0.12 of its potential returns per unit of risk. Appian Corp is currently generating about 0.04 per unit of risk. If you would invest 7,337 in Alibaba Group Holding on January 31, 2024 and sell it today you would earn a total of 304.00 from holding Alibaba Group Holding or generate 4.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Alibaba Group Holding vs. Appian Corp
Performance |
Timeline |
Alibaba Group Holding |
Appian Corp |
Alibaba Group and Appian Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alibaba Group and Appian Corp
The main advantage of trading using opposite Alibaba Group and Appian Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Appian Corp 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 Appian Corp will offset losses from the drop in Appian Corp's long position.The idea behind Alibaba Group Holding and Appian Corp 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.Appian Corp vs. Block Inc | Appian Corp vs. Adobe Systems Incorporated | Appian Corp vs. Crowdstrike Holdings | Appian Corp vs. Cloudflare |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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