Correlation Between Meta Platforms and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Alibaba Group 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 Meta Platforms and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Alibaba Group Holding, you can compare the effects of market volatilities on Meta Platforms and Alibaba Group 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 Meta Platforms with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Alibaba Group.
Diversification Opportunities for Meta Platforms and Alibaba Group
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Meta and Alibaba is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Meta Platforms 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 Meta Platforms are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Meta Platforms i.e., Meta Platforms and Alibaba Group go up and down completely randomly.
Pair Corralation between Meta Platforms and Alibaba Group
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 | 4.76% |
| Values | Daily Returns |
Meta Platforms vs. Alibaba Group Holding
Performance |
| Timeline |
| Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Alibaba Group Holding |
Meta Platforms and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Alibaba Group
The main advantage of trading using opposite Meta Platforms and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Meta Platforms vs. Meta Platforms | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc |
| Alibaba Group vs. Sea | Alibaba Group vs. Vipshop Holdings Limited | Alibaba Group vs. Amazon Inc | Alibaba Group vs. JD Inc Adr |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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