Correlation Between Boohoo PLC and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Boohoo PLC 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 Boohoo PLC and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BoohooCom PLC ADR and Alibaba Group Holding, you can compare the effects of market volatilities on Boohoo PLC 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 Boohoo PLC with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boohoo PLC and Alibaba Group.
Diversification Opportunities for Boohoo PLC and Alibaba Group
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boohoo and Alibaba is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding BoohooCom PLC ADR 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 Boohoo PLC 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 BoohooCom PLC ADR 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 Boohoo PLC i.e., Boohoo PLC and Alibaba Group go up and down completely randomly.
Pair Corralation between Boohoo PLC and Alibaba Group
Assuming the 90 days horizon BoohooCom PLC ADR is expected to generate 0.78 times more return on investment than Alibaba Group. However, BoohooCom PLC ADR is 1.28 times less risky than Alibaba Group. It trades about 0.21 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.33 per unit of risk. If you would invest 712.00 in BoohooCom PLC ADR on August 29, 2024 and sell it today you would earn a total of 56.00 from holding BoohooCom PLC ADR or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BoohooCom PLC ADR vs. Alibaba Group Holding
Performance |
| Timeline |
| BoohooCom PLC ADR |
| Alibaba Group Holding |
Boohoo PLC and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boohoo PLC and Alibaba Group
The main advantage of trading using opposite Boohoo PLC and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boohoo PLC 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.| Boohoo PLC vs. 1StdibsCom | Boohoo PLC vs. Natural Health Trend | Boohoo PLC vs. Hour Loop | Boohoo PLC vs. Liquidity Services |
| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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