Correlation Between DFS Furniture and Alibaba Health
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and Alibaba Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Alibaba Health Information, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of Alibaba Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Alibaba Health.
Diversification Opportunities for DFS Furniture and Alibaba Health
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DFS and Alibaba is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC 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 DFS Furniture 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 DFS Furniture PLC 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 DFS Furniture i.e., DFS Furniture and Alibaba Health go up and down completely randomly.
Pair Corralation between DFS Furniture and Alibaba Health
Assuming the 90 days trading horizon DFS Furniture PLC is expected to under-perform the Alibaba Health. But the stock apears to be less risky and, when comparing its historical volatility, DFS Furniture PLC is 1.2 times less risky than Alibaba Health. The stock trades about -0.13 of its potential returns per unit of risk. The Alibaba Health Information is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Alibaba Health Information on November 5, 2024 and sell it today you would earn a total of 4.00 from holding Alibaba Health Information or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Alibaba Health Information
Performance |
| Timeline |
| DFS Furniture PLC |
| Alibaba Health Infor |
DFS Furniture and Alibaba Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Alibaba Health
The main advantage of trading using opposite DFS Furniture and Alibaba Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. SIVERS SEMICONDUCTORS AB | DFS Furniture vs. NorAm Drilling AS | DFS Furniture vs. Volkswagen AG | DFS Furniture vs. Darden Restaurants |
| Alibaba Health vs. GALENA MINING LTD | Alibaba Health vs. China Datang | Alibaba Health vs. TERADATA | Alibaba Health vs. ANGLO ASIAN MINING |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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