Correlation Between Alibaba Group and Berkeley Group

Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Berkeley 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 Alibaba Group and Berkeley Group 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 Berkeley Group Holdings, you can compare the effects of market volatilities on Alibaba Group and Berkeley 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 Alibaba Group with a short position of Berkeley Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Berkeley Group.

Diversification Opportunities for Alibaba Group and Berkeley Group

0.82

Correlation Coefficient

Alibaba Group  Berkeley Group

Very poor diversification

The 3 months correlation between Alibaba and Berkeley is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Berkeley Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Group Holdings 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 Berkeley Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Group Holdings has no effect on the direction of Alibaba Group i.e., Alibaba Group and Berkeley Group go up and down completely randomly.

Pair Corralation between Alibaba Group and Berkeley Group

Assuming the 90 days horizon Alibaba Group is expected to generate 1.24 times less return on investment than Berkeley Group. In addition to that, Alibaba Group is 1.88 times more volatile than Berkeley Group Holdings. It trades about 0.09 of its total potential returns per unit of risk. Berkeley Group Holdings is currently generating about 0.21 per unit of volatility. If you would invest  1,223  in Berkeley Group Holdings on March 2, 2024 and sell it today you would earn a total of  127.00  from holding Berkeley Group Holdings or generate 10.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Alibaba Group Holding  vs.  Berkeley Group Holdings

Alibaba Group Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Group Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alibaba Group reported solid returns over the last few months and may actually be approaching a breakup point.

Berkeley Group Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Berkeley Group Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Berkeley Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alibaba Group and Berkeley Group

The main advantage of trading using opposite Alibaba Group and Berkeley Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Berkeley 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 Berkeley Group will offset losses from the drop in Berkeley Group's long position.

The idea behind Alibaba Group Holding and Berkeley Group Holdings 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..