Correlation Between Alibaba Group and Multi Manager
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Multi Manager 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 Multi Manager 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 Multi Manager Invest, you can compare the effects of market volatilities on Alibaba Group and Multi Manager 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 Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Multi Manager.
Diversification Opportunities for Alibaba Group and Multi Manager
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alibaba and Multi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Multi Manager Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Invest 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 Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Invest has no effect on the direction of Alibaba Group i.e., Alibaba Group and Multi Manager go up and down completely randomly.
Pair Corralation between Alibaba Group and Multi Manager
Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 4.69 times more return on investment than Multi Manager. However, Alibaba Group is 4.69 times more volatile than Multi Manager Invest. It trades about 0.05 of its potential returns per unit of risk. Multi Manager Invest is currently generating about -0.22 per unit of risk. If you would invest 7,146 in Alibaba Group Holding on January 25, 2024 and sell it today you would earn a total of 105.00 from holding Alibaba Group Holding or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Alibaba Group Holding vs. Multi Manager Invest
Performance |
| Timeline |
| Alibaba Group Holding |
| Multi Manager Invest |
Alibaba Group and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Multi Manager
The main advantage of trading using opposite Alibaba Group and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Multi Manager 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 Multi Manager will offset losses from the drop in Multi Manager's long position.| Alibaba Group vs. Appian Corp | Alibaba Group vs. Okta Inc | Alibaba Group vs. MongoDB | Alibaba Group vs. Twilio Inc |
| Multi Manager vs. Novo Nordisk AS | Multi Manager vs. Nordea Bank Abp | Multi Manager vs. DSV Panalpina AS | Multi Manager vs. AP Mller |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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