Correlation Between Alibaba Group and ALPEK SAB
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and ALPEK SAB 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 ALPEK SAB 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 ALPEK SAB de, you can compare the effects of market volatilities on Alibaba Group and ALPEK SAB 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 ALPEK SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and ALPEK SAB.
Diversification Opportunities for Alibaba Group and ALPEK SAB
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alibaba and ALPEK is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and ALPEK SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPEK SAB de 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 ALPEK SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPEK SAB de has no effect on the direction of Alibaba Group i.e., Alibaba Group and ALPEK SAB go up and down completely randomly.
Pair Corralation between Alibaba Group and ALPEK SAB
Assuming the 90 days trading horizon Alibaba Group is expected to generate 1.65 times less return on investment than ALPEK SAB. In addition to that, Alibaba Group is 1.42 times more volatile than ALPEK SAB de. It trades about 0.08 of its total potential returns per unit of risk. ALPEK SAB de is currently generating about 0.18 per unit of volatility. If you would invest 1,146 in ALPEK SAB de on August 28, 2024 and sell it today you would earn a total of 257.00 from holding ALPEK SAB de or generate 22.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. ALPEK SAB de
Performance |
| Timeline |
| Alibaba Group Holding |
| ALPEK SAB de |
Alibaba Group and ALPEK SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and ALPEK SAB
The main advantage of trading using opposite Alibaba Group and ALPEK SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, ALPEK SAB 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 ALPEK SAB will offset losses from the drop in ALPEK SAB's long position.| Alibaba Group vs. First Majestic Silver | Alibaba Group vs. Monster Beverage Corp | Alibaba Group vs. GMxico Transportes SAB | Alibaba Group vs. Genworth Financial |
| ALPEK SAB vs. Costco Wholesale | ALPEK SAB vs. Martin Marietta Materials | ALPEK SAB vs. FIBRA Storage | ALPEK SAB vs. United Airlines Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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