Correlation Between Alibaba Group and ThredUp
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and ThredUp 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 ThredUp 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 ThredUp, you can compare the effects of market volatilities on Alibaba Group and ThredUp 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 ThredUp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and ThredUp.
Diversification Opportunities for Alibaba Group and ThredUp
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alibaba and ThredUp is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and ThredUp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ThredUp 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 ThredUp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ThredUp has no effect on the direction of Alibaba Group i.e., Alibaba Group and ThredUp go up and down completely randomly.
Pair Corralation between Alibaba Group and ThredUp
Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the ThredUp. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 6.16 times less risky than ThredUp. The stock trades about -0.23 of its potential returns per unit of risk. The ThredUp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 62.00 in ThredUp on September 1, 2024 and sell it today you would earn a total of 90.00 from holding ThredUp or generate 145.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. ThredUp
Performance |
| Timeline |
| Alibaba Group Holding |
| ThredUp |
Alibaba Group and ThredUp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and ThredUp
The main advantage of trading using opposite Alibaba Group and ThredUp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, ThredUp 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 ThredUp will offset losses from the drop in ThredUp's long position.| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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