Correlation Between Alibaba Group and CSN Minerao
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and CSN Minerao 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 CSN Minerao 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 CSN Minerao SA, you can compare the effects of market volatilities on Alibaba Group and CSN Minerao 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 CSN Minerao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and CSN Minerao.
Diversification Opportunities for Alibaba Group and CSN Minerao
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alibaba and CSN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and CSN Minerao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSN Minerao SA 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 CSN Minerao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSN Minerao SA has no effect on the direction of Alibaba Group i.e., Alibaba Group and CSN Minerao go up and down completely randomly.
Pair Corralation between Alibaba Group and CSN Minerao
Assuming the 90 days trading horizon Alibaba Group is expected to generate 1.18 times less return on investment than CSN Minerao. But when comparing it to its historical volatility, Alibaba Group Holding is 1.08 times less risky than CSN Minerao. It trades about 0.04 of its potential returns per unit of risk. CSN Minerao SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 389.00 in CSN Minerao SA on September 1, 2024 and sell it today you would earn a total of 139.00 from holding CSN Minerao SA or generate 35.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Alibaba Group Holding vs. CSN Minerao SA
Performance |
| Timeline |
| Alibaba Group Holding |
| CSN Minerao SA |
Alibaba Group and CSN Minerao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and CSN Minerao
The main advantage of trading using opposite Alibaba Group and CSN Minerao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, CSN Minerao 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 CSN Minerao will offset losses from the drop in CSN Minerao's long position.| Alibaba Group vs. Amazon Inc | Alibaba Group vs. JD Inc | Alibaba Group vs. Etsy Inc | Alibaba Group vs. Vipshop Holdings Limited |
| CSN Minerao vs. Taiwan Semiconductor Manufacturing | CSN Minerao vs. Alibaba Group Holding | CSN Minerao vs. Microsoft | CSN Minerao vs. Alphabet |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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