Correlation Between Costco Wholesale and Alibaba Group

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale 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 Costco Wholesale and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale Corp and Alibaba Group Holding, you can compare the effects of market volatilities on Costco Wholesale 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 Costco Wholesale with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Alibaba Group.

Diversification Opportunities for Costco Wholesale and Alibaba Group

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Costco and Alibaba is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp 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 Costco Wholesale 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 Costco Wholesale Corp 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 Costco Wholesale i.e., Costco Wholesale and Alibaba Group go up and down completely randomly.

Pair Corralation between Costco Wholesale and Alibaba Group

Given the investment horizon of 90 days Costco Wholesale Corp is expected to generate 0.5 times more return on investment than Alibaba Group. However, Costco Wholesale Corp is 1.98 times less risky than Alibaba Group. It trades about 0.04 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.0 per unit of risk. If you would invest  56,363  in Costco Wholesale Corp on December 30, 2023 and sell it today you would earn a total of  16,900  from holding Costco Wholesale Corp or generate 29.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Costco Wholesale Corp  vs.  Alibaba Group Holding

 Performance 
       Timeline  
Costco Wholesale Corp 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Costco Wholesale unveiled solid returns over the last few months and may actually be approaching a breakup point.
Alibaba Group Holding 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Alibaba Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Costco Wholesale and Alibaba Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Costco Wholesale and Alibaba Group

The main advantage of trading using opposite Costco Wholesale and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale 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.
The idea behind Costco Wholesale Corp and Alibaba Group Holding 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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

Other Complementary Tools

Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Commodity Directory
Find actively traded commodities issued by global exchanges
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
CEOs Directory
Screen CEOs from public companies around the world