Correlation Between PERSIMMON PLC and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both PERSIMMON PLC 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 PERSIMMON PLC and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PERSIMMON PLC and Alibaba Group Holdings, you can compare the effects of market volatilities on PERSIMMON PLC 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 PERSIMMON PLC with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PERSIMMON PLC and Alibaba Group.
Diversification Opportunities for PERSIMMON PLC and Alibaba Group
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between PERSIMMON and Alibaba is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PERSIMMON PLC and Alibaba Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holdings and PERSIMMON PLC 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 PERSIMMON PLC 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 Holdings has no effect on the direction of PERSIMMON PLC i.e., PERSIMMON PLC and Alibaba Group go up and down completely randomly.
Pair Corralation between PERSIMMON PLC and Alibaba Group
Assuming the 90 days trading horizon PERSIMMON PLC is expected to generate 1.18 times more return on investment than Alibaba Group. However, PERSIMMON PLC is 1.18 times more volatile than Alibaba Group Holdings. It trades about 0.03 of its potential returns per unit of risk. Alibaba Group Holdings is currently generating about -0.06 per unit of risk. If you would invest 1,306 in PERSIMMON PLC on January 23, 2024 and sell it today you would earn a total of 132.00 from holding PERSIMMON PLC or generate 10.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PERSIMMON PLC vs. Alibaba Group Holdings
Performance |
| Timeline |
| PERSIMMON PLC |
| Alibaba Group Holdings |
PERSIMMON PLC and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PERSIMMON PLC and Alibaba Group
The main advantage of trading using opposite PERSIMMON PLC and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PERSIMMON PLC 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.| PERSIMMON PLC vs. BJS RESTAURANTS | PERSIMMON PLC vs. ELECTRONIC ARTS | PERSIMMON PLC vs. UMC Electronics Co | PERSIMMON PLC vs. United Utilities Group |
| Alibaba Group vs. Tencent Holdings | Alibaba Group vs. Amazon Inc | Alibaba Group vs. Microsoft | Alibaba Group vs. Apple Inc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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