Correlation Between Alibaba Group and Global E
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Global E 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 Global E 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 Global E Online, you can compare the effects of market volatilities on Alibaba Group and Global E 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 Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Global E.
Diversification Opportunities for Alibaba Group and Global E
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alibaba and Global is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Alibaba Group i.e., Alibaba Group and Global E go up and down completely randomly.
Pair Corralation between Alibaba Group and Global E
Given the investment horizon of 90 days Alibaba Group is expected to generate 9.18 times less return on investment than Global E. In addition to that, Alibaba Group is 1.13 times more volatile than Global E Online. It trades about 0.02 of its total potential returns per unit of risk. Global E Online is currently generating about 0.24 per unit of volatility. If you would invest 3,478 in Global E Online on August 26, 2024 and sell it today you would earn a total of 1,511 from holding Global E Online or generate 43.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Global E Online
Performance |
| Timeline |
| Alibaba Group Holding |
| Global E Online |
Alibaba Group and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Global E
The main advantage of trading using opposite Alibaba Group and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Global E 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 Global E will offset losses from the drop in Global E's long position.| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
| Global E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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