Correlation Between Alibaba Group and Oriental Culture
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Oriental Culture 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 Oriental Culture 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 Oriental Culture Holding, you can compare the effects of market volatilities on Alibaba Group and Oriental Culture 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 Oriental Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Oriental Culture.
Diversification Opportunities for Alibaba Group and Oriental Culture
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alibaba and Oriental is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Oriental Culture Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Culture 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 Oriental Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Culture Holding has no effect on the direction of Alibaba Group i.e., Alibaba Group and Oriental Culture go up and down completely randomly.
Pair Corralation between Alibaba Group and Oriental Culture
Assuming the 90 days horizon Alibaba Group Holding is expected to under-perform the Oriental Culture. But the pink sheet apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 1.82 times less risky than Oriental Culture. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Oriental Culture Holding is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 143.00 in Oriental Culture Holding on August 25, 2024 and sell it today you would lose (15.00) from holding Oriental Culture Holding or give up 10.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Oriental Culture Holding
Performance |
| Timeline |
| Alibaba Group Holding |
| Oriental Culture Holding |
Alibaba Group and Oriental Culture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Oriental Culture
The main advantage of trading using opposite Alibaba Group and Oriental Culture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Oriental Culture 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 Oriental Culture will offset losses from the drop in Oriental Culture's long position.| Alibaba Group vs. Meituan ADR | Alibaba Group vs. Meituan | Alibaba Group vs. Qurate Retail Series | Alibaba Group vs. ThredUp |
| Oriental Culture vs. Hour Loop | Oriental Culture vs. Jowell Global | Oriental Culture vs. Qurate Retail Series | Oriental Culture vs. Emerge Commerce |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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