Correlation Between Alibaba Group and Farfetch
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Farfetch 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 Farfetch 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 Farfetch Ltd Class, you can compare the effects of market volatilities on Alibaba Group and Farfetch 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 Farfetch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Farfetch.
Diversification Opportunities for Alibaba Group and Farfetch
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alibaba and Farfetch is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Farfetch Ltd Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farfetch Class 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 Farfetch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farfetch Class has no effect on the direction of Alibaba Group i.e., Alibaba Group and Farfetch go up and down completely randomly.
Pair Corralation between Alibaba Group and Farfetch
If you would invest 537.00 in Farfetch Ltd Class on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Farfetch Ltd Class or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Alibaba Group Holding vs. Farfetch Ltd Class
Performance |
| Timeline |
| Alibaba Group Holding |
| Farfetch Class |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alibaba Group and Farfetch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Farfetch
The main advantage of trading using opposite Alibaba Group and Farfetch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Farfetch 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 Farfetch will offset losses from the drop in Farfetch's long position.| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
| Farfetch vs. JD Inc Adr | Farfetch vs. Alibaba Group Holding | Farfetch vs. Sea | Farfetch vs. Vipshop Holdings Limited |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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