Correlation Between Alibaba Group and AKA Brands
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and AKA Brands 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 AKA Brands 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 AKA Brands Holding, you can compare the effects of market volatilities on Alibaba Group and AKA Brands 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 AKA Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and AKA Brands.
Diversification Opportunities for Alibaba Group and AKA Brands
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alibaba and AKA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and AKA Brands Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKA Brands Holding 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 AKA Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKA Brands Holding has no effect on the direction of Alibaba Group i.e., Alibaba Group and AKA Brands go up and down completely randomly.
Pair Corralation between Alibaba Group and AKA Brands
Assuming the 90 days horizon Alibaba Group is expected to generate 4.21 times less return on investment than AKA Brands. But when comparing it to its historical volatility, Alibaba Group Holding is 2.12 times less risky than AKA Brands. It trades about 0.02 of its potential returns per unit of risk. AKA Brands Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,196 in AKA Brands Holding on August 25, 2024 and sell it today you would lose (78.00) from holding AKA Brands Holding or give up 3.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. AKA Brands Holding
Performance |
| Timeline |
| Alibaba Group Holding |
| AKA Brands Holding |
Alibaba Group and AKA Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and AKA Brands
The main advantage of trading using opposite Alibaba Group and AKA Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, AKA Brands 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 AKA Brands will offset losses from the drop in AKA Brands' long position.| Alibaba Group vs. Meituan ADR | Alibaba Group vs. Meituan | Alibaba Group vs. Qurate Retail Series | Alibaba Group vs. ThredUp |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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