Correlation Between Alibaba Group and Biogen
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Biogen 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 Biogen 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 Biogen Inc, you can compare the effects of market volatilities on Alibaba Group and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Biogen.
Diversification Opportunities for Alibaba Group and Biogen
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alibaba and Biogen is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Alibaba Group i.e., Alibaba Group and Biogen go up and down completely randomly.
Pair Corralation between Alibaba Group and Biogen
Assuming the 90 days trading horizon Alibaba Group Holding is expected to generate 1.59 times more return on investment than Biogen. However, Alibaba Group is 1.59 times more volatile than Biogen Inc. It trades about 0.02 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.06 per unit of risk. If you would invest 1,662 in Alibaba Group Holding on August 24, 2024 and sell it today you would earn a total of 108.00 from holding Alibaba Group Holding or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Alibaba Group Holding vs. Biogen Inc
Performance |
| Timeline |
| Alibaba Group Holding |
| Biogen Inc |
Alibaba Group and Biogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Biogen
The main advantage of trading using opposite Alibaba Group and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.| Alibaba Group vs. Zoom Video Communications | Alibaba Group vs. GP Investments | Alibaba Group vs. Extra Space Storage | Alibaba Group vs. Automatic Data Processing |
| Biogen vs. Brpr Corporate Offices | Biogen vs. Verizon Communications | Biogen vs. Metalurgica Gerdau SA | Biogen vs. Charter Communications |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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