Correlation Between Ford and ALIBABA
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By analyzing existing cross correlation between Ford Motor and ALIBABA GROUP HLDG, you can compare the effects of market volatilities on Ford 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 Ford with a short position of ALIBABA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ALIBABA.
Diversification Opportunities for Ford and ALIBABA
Very good diversification
The 3 months correlation between Ford and ALIBABA is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and ALIBABA go up and down completely randomly.
Pair Corralation between Ford and ALIBABA
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.86 times more return on investment than ALIBABA. However, Ford is 2.86 times more volatile than ALIBABA GROUP HLDG. It trades about 0.0 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 1,122 in Ford Motor on August 28, 2024 and sell it today you would lose (12.00) from holding Ford Motor or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Ford Motor vs. ALIBABA GROUP HLDG
Performance |
| Timeline |
| Ford Motor |
| ALIBABA GROUP HLDG |
Ford and ALIBABA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ALIBABA
The main advantage of trading using opposite Ford and ALIBABA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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