Correlation Between Alibaba Health and PetMed Express
Can any of the company-specific risk be diversified away by investing in both Alibaba Health and PetMed Express 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 Health and PetMed Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Health Information and PetMed Express, you can compare the effects of market volatilities on Alibaba Health and PetMed Express 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 Health with a short position of PetMed Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Health and PetMed Express.
Diversification Opportunities for Alibaba Health and PetMed Express
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alibaba and PetMed is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Health Information and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express and Alibaba Health 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 Health Information are associated (or correlated) with PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of Alibaba Health i.e., Alibaba Health and PetMed Express go up and down completely randomly.
Pair Corralation between Alibaba Health and PetMed Express
Assuming the 90 days horizon Alibaba Health Information is expected to under-perform the PetMed Express. In addition to that, Alibaba Health is 2.07 times more volatile than PetMed Express. It trades about -0.1 of its total potential returns per unit of risk. PetMed Express is currently generating about 0.02 per unit of volatility. If you would invest 510.00 in PetMed Express on October 20, 2024 and sell it today you would earn a total of 1.00 from holding PetMed Express or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alibaba Health Information vs. PetMed Express
Performance |
| Timeline |
| Alibaba Health Infor |
| PetMed Express |
Alibaba Health and PetMed Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Health and PetMed Express
The main advantage of trading using opposite Alibaba Health and PetMed Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Health position performs unexpectedly, PetMed Express 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 PetMed Express will offset losses from the drop in PetMed Express' long position.| Alibaba Health vs. Alternative Energy | Alibaba Health vs. Allstar Health Brands | Alibaba Health vs. Walgreens Boots Alliance | Alibaba Health vs. Alibaba Health Information |
| PetMed Express vs. High Tide | PetMed Express vs. China Jo Jo Drugstores | PetMed Express vs. Walgreens Boots Alliance | PetMed Express vs. 111 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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