Correlation Between Alibaba Group and StockRate Invest
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and StockRate Invest 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 StockRate Invest 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 StockRate Invest , you can compare the effects of market volatilities on Alibaba Group and StockRate Invest 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 StockRate Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and StockRate Invest.
Diversification Opportunities for Alibaba Group and StockRate Invest
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alibaba and StockRate is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and StockRate Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StockRate 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 StockRate Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StockRate Invest has no effect on the direction of Alibaba Group i.e., Alibaba Group and StockRate Invest go up and down completely randomly.
Pair Corralation between Alibaba Group and StockRate Invest
Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 3.67 times more return on investment than StockRate Invest. However, Alibaba Group is 3.67 times more volatile than StockRate Invest . It trades about 0.13 of its potential returns per unit of risk. StockRate Invest is currently generating about -0.23 per unit of risk. If you would invest 7,148 in Alibaba Group Holding on January 26, 2024 and sell it today you would earn a total of 315.00 from holding Alibaba Group Holding or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Alibaba Group Holding vs. StockRate Invest
Performance |
| Timeline |
| Alibaba Group Holding |
| StockRate Invest |
Alibaba Group and StockRate Invest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and StockRate Invest
The main advantage of trading using opposite Alibaba Group and StockRate Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, StockRate Invest 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 StockRate Invest will offset losses from the drop in StockRate Invest's long position.| Alibaba Group vs. Sea | Alibaba Group vs. Vipshop Holdings Limited | Alibaba Group vs. Amazon Inc | Alibaba Group vs. JD Inc Adr |
| StockRate Invest vs. Novo Nordisk AS | StockRate Invest vs. Nordea Bank Abp | StockRate Invest vs. DSV Panalpina AS | StockRate Invest 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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