Correlation Between Alibaba Group and Delivery Hero
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Delivery Hero 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 Delivery Hero 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 Delivery Hero SE, you can compare the effects of market volatilities on Alibaba Group and Delivery Hero 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 Delivery Hero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Delivery Hero.
Diversification Opportunities for Alibaba Group and Delivery Hero
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alibaba and Delivery is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Delivery Hero SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delivery Hero SE 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 Delivery Hero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delivery Hero SE has no effect on the direction of Alibaba Group i.e., Alibaba Group and Delivery Hero go up and down completely randomly.
Pair Corralation between Alibaba Group and Delivery Hero
Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the Delivery Hero. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 1.09 times less risky than Delivery Hero. The stock trades about -0.23 of its potential returns per unit of risk. The Delivery Hero SE is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 420.00 in Delivery Hero SE on September 1, 2024 and sell it today you would lose (27.00) from holding Delivery Hero SE or give up 6.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Delivery Hero SE
Performance |
| Timeline |
| Alibaba Group Holding |
| Delivery Hero SE |
Alibaba Group and Delivery Hero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Delivery Hero
The main advantage of trading using opposite Alibaba Group and Delivery Hero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Delivery Hero 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 Delivery Hero will offset losses from the drop in Delivery Hero's long position.| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
| Delivery Hero vs. Monotaro Co | Delivery Hero vs. Phonex Inc | Delivery Hero vs. 1StdibsCom | Delivery Hero vs. Natural Health Trend |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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