Correlation Between Alibaba Group and ROCKWOOL International
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and ROCKWOOL International 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 ROCKWOOL International 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 ROCKWOOL International AS, you can compare the effects of market volatilities on Alibaba Group and ROCKWOOL International 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 ROCKWOOL International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and ROCKWOOL International.
Diversification Opportunities for Alibaba Group and ROCKWOOL International
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alibaba and ROCKWOOL is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and ROCKWOOL International AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROCKWOOL International 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 ROCKWOOL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROCKWOOL International has no effect on the direction of Alibaba Group i.e., Alibaba Group and ROCKWOOL International go up and down completely randomly.
Pair Corralation between Alibaba Group and ROCKWOOL International
Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the ROCKWOOL International. In addition to that, Alibaba Group is 1.24 times more volatile than ROCKWOOL International AS. It trades about -0.04 of its total potential returns per unit of risk. ROCKWOOL International AS is currently generating about 0.19 per unit of volatility. If you would invest 151,111 in ROCKWOOL International AS on January 20, 2024 and sell it today you would earn a total of 71,689 from holding ROCKWOOL International AS or generate 47.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. ROCKWOOL International AS
Performance |
| Timeline |
| Alibaba Group Holding |
| ROCKWOOL International |
Alibaba Group and ROCKWOOL International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and ROCKWOOL International
The main advantage of trading using opposite Alibaba Group and ROCKWOOL International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, ROCKWOOL International 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 ROCKWOOL International will offset losses from the drop in ROCKWOOL International's long position.| Alibaba Group vs. Shoe Carnival | Alibaba Group vs. Hibbett Sports | Alibaba Group vs. Citi Trends | Alibaba Group vs. Zumiez Inc |
| ROCKWOOL International vs. Per Aarsleff Holding | ROCKWOOL International vs. Matas AS | ROCKWOOL International vs. DFDS AS | ROCKWOOL International vs. ALK Abell AS |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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