Correlation Between Banco Bradesco and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Alibaba Group 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 Banco Bradesco and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bradesco DRC and Alibaba Group Holding, you can compare the effects of market volatilities on Banco Bradesco and Alibaba Group 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 Banco Bradesco with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Alibaba Group.
Diversification Opportunities for Banco Bradesco and Alibaba Group
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banco and Alibaba is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco DRC and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Banco Bradesco 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 Banco Bradesco DRC are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Alibaba Group go up and down completely randomly.
Pair Corralation between Banco Bradesco and Alibaba Group
Assuming the 90 days trading horizon Banco Bradesco DRC is expected to under-perform the Alibaba Group. But the stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco DRC is 1.19 times less risky than Alibaba Group. The stock trades about -0.09 of its potential returns per unit of risk. The Alibaba Group Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 971,944 in Alibaba Group Holding on October 14, 2024 and sell it today you would earn a total of 95,556 from holding Alibaba Group Holding or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco DRC vs. Alibaba Group Holding
Performance |
| Timeline |
| Banco Bradesco DRC |
| Alibaba Group Holding |
Banco Bradesco and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Alibaba Group
The main advantage of trading using opposite Banco Bradesco and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Banco Bradesco vs. Harmony Gold Mining | Banco Bradesco vs. Agrometal SAI | Banco Bradesco vs. United States Steel | Banco Bradesco vs. Compania de Transporte |
| Alibaba Group vs. Pfizer Inc | Alibaba Group vs. Instituto Rosenbusch SA | Alibaba Group vs. Sociedad Comercial del | Alibaba Group vs. Ledesma SAAI |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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