Correlation Between Alibaba Group and Alfa Holdings
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Alfa Holdings 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 Alfa Holdings 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 Alfa Holdings SA, you can compare the effects of market volatilities on Alibaba Group and Alfa Holdings 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 Alfa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Alfa Holdings.
Diversification Opportunities for Alibaba Group and Alfa Holdings
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alibaba and Alfa is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings 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 Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of Alibaba Group i.e., Alibaba Group and Alfa Holdings go up and down completely randomly.
Pair Corralation between Alibaba Group and Alfa Holdings
Assuming the 90 days trading horizon Alibaba Group Holding is expected to under-perform the Alfa Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 1.21 times less risky than Alfa Holdings. The stock trades about -0.26 of its potential returns per unit of risk. The Alfa Holdings SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 726.00 in Alfa Holdings SA on August 29, 2024 and sell it today you would earn a total of 19.00 from holding Alfa Holdings SA or generate 2.62% 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. Alfa Holdings SA
Performance |
| Timeline |
| Alibaba Group Holding |
| Alfa Holdings SA |
Alibaba Group and Alfa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Alfa Holdings
The main advantage of trading using opposite Alibaba Group and Alfa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Alfa Holdings 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 Alfa Holdings will offset losses from the drop in Alfa Holdings' long position.| Alibaba Group vs. Metalrgica Riosulense SA | Alibaba Group vs. MAHLE Metal Leve | Alibaba Group vs. Costco Wholesale | Alibaba Group vs. Unifique Telecomunicaes SA |
| Alfa Holdings vs. Apartment Investment and | Alfa Holdings vs. Charter Communications | Alfa Holdings vs. Fidelity National Information | Alfa Holdings vs. United Rentals |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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