Correlation Between Alibaba Group and 1stdibs

By analyzing existing cross correlation between Alibaba Group Holding and 1stdibs, you can compare the effects of market volatilities on Alibaba Group and 1stdibs 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 1stdibs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and 1stdibs.

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Can any of the company-specific risk be diversified away by investing in both Alibaba Group and 1stdibs 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 1stdibs into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Alibaba Group and 1stdibs

0.83
  Correlation Coefficient
Alibaba Group Holding
1stdibs

Very poor diversification

The 3 months correlation between Alibaba and 1stdibs is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and 1stdibs in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on 1stdibs 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 1stdibs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1stdibs has no effect on the direction of Alibaba Group i.e., Alibaba Group and 1stdibs go up and down completely randomly.

Pair Corralation between Alibaba Group and 1stdibs

Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the 1stdibs. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 3.56 times less risky than 1stdibs. The stock trades about -0.09 of its potential returns per unit of risk. The 1stdibs is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,000  in 1stdibs on June 28, 2021 and sell it today you would lose (645.00)  from holding 1stdibs or give up 32.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy29.96%
ValuesDaily Returns

Alibaba Group Holding  vs.  1stdibs

 Performance (%) 
      Timeline 
Alibaba Group Holding 
 Alibaba Performance
0 of 100
Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in October 2021. The current disturbance may also be a sign of long term up-swing for the company investors.

Alibaba Price Channel

1stdibs 
 1stdibs Performance
0 of 100
Over the last 90 days 1stdibs has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in October 2021. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

1stdibs Price Channel

Alibaba Group and 1stdibs Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alibaba Group and 1stdibs

The main advantage of trading using opposite Alibaba Group and 1stdibs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, 1stdibs 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 1stdibs will offset losses from the drop in 1stdibs' long position.
The idea behind Alibaba Group Holding and 1stdibs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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