Correlation Between China Jo and Alibaba Health
Can any of the company-specific risk be diversified away by investing in both China Jo and Alibaba Health 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 China Jo and Alibaba Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Jo Jo Drugstores and Alibaba Health Information, you can compare the effects of market volatilities on China Jo and Alibaba Health 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 China Jo with a short position of Alibaba Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Jo and Alibaba Health.
Diversification Opportunities for China Jo and Alibaba Health
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Alibaba is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding China Jo Jo Drugstores and Alibaba Health Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Health Infor and China Jo 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 China Jo Jo Drugstores are associated (or correlated) with Alibaba Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Health Infor has no effect on the direction of China Jo i.e., China Jo and Alibaba Health go up and down completely randomly.
Pair Corralation between China Jo and Alibaba Health
Given the investment horizon of 90 days China Jo is expected to generate 2.81 times less return on investment than Alibaba Health. But when comparing it to its historical volatility, China Jo Jo Drugstores is 1.15 times less risky than Alibaba Health. It trades about 0.02 of its potential returns per unit of risk. Alibaba Health Information is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Alibaba Health Information on November 2, 2024 and sell it today you would earn a total of 8.00 from holding Alibaba Health Information or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.04% |
| Values | Daily Returns |
China Jo Jo Drugstores vs. Alibaba Health Information
Performance |
| Timeline |
| China Jo Jo |
| Alibaba Health Infor |
China Jo and Alibaba Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Jo and Alibaba Health
The main advantage of trading using opposite China Jo and Alibaba Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Jo position performs unexpectedly, Alibaba Health 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 Health will offset losses from the drop in Alibaba Health's long position.| China Jo vs. SunLink Health Systems | China Jo vs. Allstar Health Brands | China Jo vs. Walgreens Boots Alliance | China Jo vs. High Tide |
| Alibaba Health vs. Alternative Energy | Alibaba Health vs. Allstar Health Brands | Alibaba Health vs. Walgreens Boots Alliance | Alibaba Health vs. Alibaba Health Information |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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