Correlation Between Aluminum and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Aluminum 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 Aluminum 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 Aluminum 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 Aluminum with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminum and Alibaba Group.
Diversification Opportunities for Aluminum and Alibaba Group
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aluminum and Alibaba is -0.34. 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 Aluminum 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 Aluminum i.e., Aluminum and Alibaba Group go up and down completely randomly.
Pair Corralation between Aluminum and Alibaba Group
Assuming the 90 days horizon Aluminum of is expected to generate 1.52 times more return on investment than Alibaba Group. However, Aluminum is 1.52 times more volatile than Alibaba Group Holding. It trades about 0.15 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.07 per unit of risk. If you would invest 55.00 in Aluminum of on October 25, 2024 and sell it today you would earn a total of 4.00 from holding Aluminum of or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. Alibaba Group Holding
Performance |
| Timeline |
| Aluminum |
| Alibaba Group Holding |
Aluminum and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminum and Alibaba Group
The main advantage of trading using opposite Aluminum and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminum 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.| Aluminum vs. Norsk Hydro ASA | Aluminum vs. Alcoa Corp | Aluminum vs. Kaiser Aluminum | Aluminum vs. Century Aluminum |
| Alibaba Group vs. Platinum Investment Management | Alibaba Group vs. Gruppo Mutuionline SpA | Alibaba Group vs. United Utilities Group | Alibaba Group vs. Chesapeake Utilities |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |