Correlation Between Solo Brands and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Solo Brands 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 Solo Brands and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solo Brands and Alibaba Group Holding, you can compare the effects of market volatilities on Solo Brands 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 Solo Brands with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solo Brands and Alibaba Group.
Diversification Opportunities for Solo Brands and Alibaba Group
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Solo and Alibaba is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands 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 Solo Brands 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 Solo Brands 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 Solo Brands i.e., Solo Brands and Alibaba Group go up and down completely randomly.
Pair Corralation between Solo Brands and Alibaba Group
Considering the 90-day investment horizon Solo Brands is expected to generate 1.47 times more return on investment than Alibaba Group. However, Solo Brands is 1.47 times more volatile than Alibaba Group Holding. It trades about 0.05 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.04 per unit of risk. If you would invest 103.00 in Solo Brands on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Solo Brands or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Solo Brands vs. Alibaba Group Holding
Performance |
| Timeline |
| Solo Brands |
| Alibaba Group Holding |
Solo Brands and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solo Brands and Alibaba Group
The main advantage of trading using opposite Solo Brands and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands 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.| Solo Brands vs. Qurate Retail Series | Solo Brands vs. Hour Loop | Solo Brands vs. 1StdibsCom | Solo Brands vs. Baozun Inc |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |