Correlation Between Alibaba Group and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Coupang LLC 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 Group and Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Coupang LLC, you can compare the effects of market volatilities on Alibaba Group and Coupang LLC 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 Group with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Coupang LLC.
Diversification Opportunities for Alibaba Group and Coupang LLC
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alibaba and Coupang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Alibaba Group 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 Group Holding are associated (or correlated) with Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of Alibaba Group i.e., Alibaba Group and Coupang LLC go up and down completely randomly.
Pair Corralation between Alibaba Group and Coupang LLC
Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 1.07 times more return on investment than Coupang LLC. However, Alibaba Group is 1.07 times more volatile than Coupang LLC. It trades about 0.04 of its potential returns per unit of risk. Coupang LLC is currently generating about -0.09 per unit of risk. If you would invest 8,431 in Alibaba Group Holding on October 20, 2024 and sell it today you would earn a total of 81.00 from holding Alibaba Group Holding or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Coupang LLC
Performance |
| Timeline |
| Alibaba Group Holding |
| Coupang LLC |
Alibaba Group and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Coupang LLC
The main advantage of trading using opposite Alibaba Group and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Coupang LLC 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 Coupang LLC will offset losses from the drop in Coupang LLC's long position.| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
| Coupang LLC vs. MercadoLibre | Coupang LLC vs. PDD Holdings | Coupang LLC vs. JD Inc Adr | Coupang LLC vs. Alibaba Group Holding |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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