Correlation Between Grupo Financiero and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Grupo Financiero 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 Grupo Financiero and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Financiero Galicia and Alibaba Group Holding, you can compare the effects of market volatilities on Grupo Financiero 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 Grupo Financiero with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Alibaba Group.
Diversification Opportunities for Grupo Financiero and Alibaba Group
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grupo and Alibaba is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia 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 Grupo Financiero 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 Grupo Financiero Galicia 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 Grupo Financiero i.e., Grupo Financiero and Alibaba Group go up and down completely randomly.
Pair Corralation between Grupo Financiero and Alibaba Group
Assuming the 90 days trading horizon Grupo Financiero Galicia is expected to generate 1.12 times more return on investment than Alibaba Group. However, Grupo Financiero is 1.12 times more volatile than Alibaba Group Holding. It trades about 0.22 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 184,680 in Grupo Financiero Galicia on October 10, 2024 and sell it today you would earn a total of 663,320 from holding Grupo Financiero Galicia or generate 359.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Financiero Galicia vs. Alibaba Group Holding
Performance |
| Timeline |
| Grupo Financiero Galicia |
| Alibaba Group Holding |
Grupo Financiero and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Financiero and Alibaba Group
The main advantage of trading using opposite Grupo Financiero and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero 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.| Grupo Financiero vs. Harmony Gold Mining | Grupo Financiero vs. Telecom Argentina | Grupo Financiero vs. Agrometal SAI |
| Alibaba Group vs. Telecom Argentina | Alibaba Group vs. Harmony Gold Mining | Alibaba Group vs. United States Steel | Alibaba Group vs. Agrometal SAI |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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