Correlation Between Apple and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Alibaba Group Holding, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Alibaba Group.
Diversification Opportunities for Apple and Alibaba Group
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and Alibaba is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Alibaba Group go up and down completely randomly.
Pair Corralation between Apple and Alibaba Group
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.43 times more return on investment than Alibaba Group. However, Apple Inc is 2.31 times less risky than Alibaba Group. It trades about 0.13 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.1 per unit of risk. If you would invest 20,720 in Apple Inc on August 30, 2024 and sell it today you would earn a total of 1,485 from holding Apple Inc or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Alibaba Group Holding
Performance |
| Timeline |
| Apple Inc |
| Alibaba Group Holding |
Apple and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Alibaba Group
The main advantage of trading using opposite Apple and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. CECO ENVIRONMENTAL | Apple vs. NIPPON STEEL SPADR | Apple vs. QURATE RETAIL INC | Apple vs. Boiron SA |
| Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |