Correlation Between Alibaba Group and Eternit SA
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Eternit SA 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 Eternit SA 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 Eternit SA, you can compare the effects of market volatilities on Alibaba Group and Eternit SA 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 Eternit SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Eternit SA.
Diversification Opportunities for Alibaba Group and Eternit SA
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alibaba and Eternit is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Eternit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternit 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 Eternit SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternit SA has no effect on the direction of Alibaba Group i.e., Alibaba Group and Eternit SA go up and down completely randomly.
Pair Corralation between Alibaba Group and Eternit SA
Assuming the 90 days trading horizon Alibaba Group Holding is expected to under-perform the Eternit SA. In addition to that, Alibaba Group is 1.26 times more volatile than Eternit SA. It trades about -0.07 of its total potential returns per unit of risk. Eternit SA is currently generating about 0.1 per unit of volatility. If you would invest 508.00 in Eternit SA on October 24, 2024 and sell it today you would earn a total of 13.00 from holding Eternit SA or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Eternit SA
Performance |
| Timeline |
| Alibaba Group Holding |
| Eternit SA |
Alibaba Group and Eternit SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Eternit SA
The main advantage of trading using opposite Alibaba Group and Eternit SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Eternit SA 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 Eternit SA will offset losses from the drop in Eternit SA's long position.| Alibaba Group vs. Martin Marietta Materials, | Alibaba Group vs. Patria Investments Limited | Alibaba Group vs. T Mobile | Alibaba Group vs. Molson Coors Beverage |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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