Correlation Between IPower and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both IPower 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 IPower and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iPower Inc and Alibaba Group Holding, you can compare the effects of market volatilities on IPower 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 IPower with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPower and Alibaba Group.
Diversification Opportunities for IPower and Alibaba Group
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPower and Alibaba is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding iPower Inc 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 IPower 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 iPower Inc 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 IPower i.e., IPower and Alibaba Group go up and down completely randomly.
Pair Corralation between IPower and Alibaba Group
Considering the 90-day investment horizon iPower Inc is expected to under-perform the Alibaba Group. In addition to that, IPower is 2.92 times more volatile than Alibaba Group Holding. It trades about -0.27 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.16 per unit of volatility. If you would invest 1,250 in Alibaba Group Holding on August 27, 2024 and sell it today you would lose (165.00) from holding Alibaba Group Holding or give up 13.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iPower Inc vs. Alibaba Group Holding
Performance |
| Timeline |
| iPower Inc |
| Alibaba Group Holding |
IPower and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPower and Alibaba Group
The main advantage of trading using opposite IPower and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPower 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.| IPower vs. Hour Loop | IPower vs. Qurate Retail Series | IPower vs. MOGU Inc | IPower vs. Meiwu Technology Co |
| Alibaba Group vs. 1StdibsCom | Alibaba Group vs. Natural Health Trend | Alibaba Group vs. Hour Loop | Alibaba Group vs. Liquidity Services |
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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