Correlation Between Bristol Myers and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Bristol Myers 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 Bristol Myers and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bristol Myers Squibb and Alibaba Group Holding, you can compare the effects of market volatilities on Bristol Myers 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 Bristol Myers with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol Myers and Alibaba Group.
Diversification Opportunities for Bristol Myers and Alibaba Group
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bristol and Alibaba is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb 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 Bristol Myers 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 Bristol Myers Squibb 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 Bristol Myers i.e., Bristol Myers and Alibaba Group go up and down completely randomly.
Pair Corralation between Bristol Myers and Alibaba Group
Assuming the 90 days trading horizon Bristol Myers Squibb is expected to under-perform the Alibaba Group. But the stock apears to be less risky and, when comparing its historical volatility, Bristol Myers Squibb is 2.04 times less risky than Alibaba Group. The stock trades about -0.08 of its potential returns per unit of risk. The Alibaba Group Holding is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 186,100 in Alibaba Group Holding on November 28, 2024 and sell it today you would earn a total of 98,420 from holding Alibaba Group Holding or generate 52.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Alibaba Group Holding
Performance |
| Timeline |
| Bristol Myers Squibb |
| Alibaba Group Holding |
Bristol Myers and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol Myers and Alibaba Group
The main advantage of trading using opposite Bristol Myers and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol Myers 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.| Bristol Myers vs. Lloyds Banking Group | Bristol Myers vs. Desarrolladora Homex SAB | Bristol Myers vs. United States Steel | Bristol Myers vs. Grupo Hotelero Santa |
| Alibaba Group vs. Costco Wholesale | Alibaba Group vs. Cognizant Technology Solutions | Alibaba Group vs. Air Transport Services | Alibaba Group vs. Micron Technology |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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