Correlation Between Chevron Corp and ALIBABA
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By analyzing existing cross correlation between Chevron Corp and ALIBABA GROUP HLDG, you can compare the effects of market volatilities on Chevron Corp and ALIBABA 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 Chevron Corp with a short position of ALIBABA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and ALIBABA.
Diversification Opportunities for Chevron Corp and ALIBABA
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chevron and ALIBABA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ALIBABA GROUP HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIBABA GROUP HLDG and Chevron Corp 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 Chevron Corp are associated (or correlated) with ALIBABA. 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 HLDG has no effect on the direction of Chevron Corp i.e., Chevron Corp and ALIBABA go up and down completely randomly.
Pair Corralation between Chevron Corp and ALIBABA
Considering the 90-day investment horizon Chevron Corp is expected to generate 1.53 times more return on investment than ALIBABA. However, Chevron Corp is 1.53 times more volatile than ALIBABA GROUP HLDG. It trades about 0.26 of its potential returns per unit of risk. ALIBABA GROUP HLDG is currently generating about -0.19 per unit of risk. If you would invest 14,402 in Chevron Corp on August 28, 2024 and sell it today you would earn a total of 1,851 from holding Chevron Corp or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 79.07% |
| Values | Daily Returns |
Chevron Corp vs. ALIBABA GROUP HLDG
Performance |
| Timeline |
| Chevron Corp |
| ALIBABA GROUP HLDG |
Chevron Corp and ALIBABA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and ALIBABA
The main advantage of trading using opposite Chevron Corp and ALIBABA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, ALIBABA 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 will offset losses from the drop in ALIBABA's long position.The idea behind Chevron Corp and ALIBABA GROUP HLDG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ALIBABA vs. AEP TEX INC | ALIBABA vs. US BANK NATIONAL | ALIBABA vs. Omega Healthcare Investors | ALIBABA vs. Zoom Video Communications |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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