Correlation Between Alibaba Group and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Omega Healthcare 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 Omega Healthcare 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 Omega Healthcare Investors,, you can compare the effects of market volatilities on Alibaba Group and Omega Healthcare 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 Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Omega Healthcare.
Diversification Opportunities for Alibaba Group and Omega Healthcare
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alibaba and Omega is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Omega Healthcare Investors, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv 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 Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of Alibaba Group i.e., Alibaba Group and Omega Healthcare go up and down completely randomly.
Pair Corralation between Alibaba Group and Omega Healthcare
Assuming the 90 days trading horizon Alibaba Group Holding is expected to generate 1.46 times more return on investment than Omega Healthcare. However, Alibaba Group is 1.46 times more volatile than Omega Healthcare Investors,. It trades about 0.07 of its potential returns per unit of risk. Omega Healthcare Investors, is currently generating about -0.26 per unit of risk. If you would invest 1,856 in Alibaba Group Holding on October 30, 2024 and sell it today you would earn a total of 45.00 from holding Alibaba Group Holding or generate 2.42% 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. Omega Healthcare Investors,
Performance |
| Timeline |
| Alibaba Group Holding |
| Omega Healthcare Inv |
Alibaba Group and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Omega Healthcare
The main advantage of trading using opposite Alibaba Group and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Omega Healthcare 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 Omega Healthcare will offset losses from the drop in Omega Healthcare's long position.| Alibaba Group vs. Globus Medical, | Alibaba Group vs. Tres Tentos Agroindustrial | Alibaba Group vs. United Rentals | Alibaba Group vs. CVS Health |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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