Correlation Between Aluminumof China and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Alibaba Group Holding, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Alibaba Group.
Diversification Opportunities for Aluminumof China and Alibaba Group
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aluminumof and Alibaba is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of 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 Aluminumof China 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 Aluminum of 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 Aluminumof China i.e., Aluminumof China and Alibaba Group go up and down completely randomly.
Pair Corralation between Aluminumof China and Alibaba Group
Assuming the 90 days horizon Aluminumof China is expected to generate 2.84 times less return on investment than Alibaba Group. In addition to that, Aluminumof China is 1.06 times more volatile than Alibaba Group Holding. It trades about 0.1 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.29 per unit of volatility. If you would invest 1,038 in Alibaba Group Holding on November 4, 2024 and sell it today you would earn a total of 192.00 from holding Alibaba Group Holding or generate 18.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aluminum of vs. Alibaba Group Holding
Performance |
| Timeline |
| Aluminumof China |
| Alibaba Group Holding |
Aluminumof China and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Alibaba Group
The main advantage of trading using opposite Aluminumof China and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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.| Aluminumof China vs. Highlight Communications AG | Aluminumof China vs. SK TELECOM TDADR | Aluminumof China vs. PRECISION DRILLING P | Aluminumof China vs. Singapore Telecommunications Limited |
| Alibaba Group vs. Cal Maine Foods | Alibaba Group vs. GREENX METALS LTD | Alibaba Group vs. DISTRICT METALS | Alibaba Group vs. East Africa Metals |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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