Correlation Between Alibaba Group and Danish Aerospace
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Danish Aerospace 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 Danish Aerospace 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 Danish Aerospace, you can compare the effects of market volatilities on Alibaba Group and Danish Aerospace 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 Danish Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Danish Aerospace.
Diversification Opportunities for Alibaba Group and Danish Aerospace
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alibaba and Danish is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Danish Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danish Aerospace 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 Danish Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danish Aerospace has no effect on the direction of Alibaba Group i.e., Alibaba Group and Danish Aerospace go up and down completely randomly.
Pair Corralation between Alibaba Group and Danish Aerospace
Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the Danish Aerospace. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 3.62 times less risky than Danish Aerospace. The stock trades about -0.22 of its potential returns per unit of risk. The Danish Aerospace is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 330.00 in Danish Aerospace on January 20, 2024 and sell it today you would lose (10.00) from holding Danish Aerospace or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Alibaba Group Holding vs. Danish Aerospace
Performance |
| Timeline |
| Alibaba Group Holding |
| Danish Aerospace |
Alibaba Group and Danish Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Danish Aerospace
The main advantage of trading using opposite Alibaba Group and Danish Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Danish Aerospace 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 Danish Aerospace will offset losses from the drop in Danish Aerospace's long position.| Alibaba Group vs. Shoe Carnival | Alibaba Group vs. Hibbett Sports | Alibaba Group vs. Citi Trends | Alibaba Group vs. Zumiez Inc |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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