Correlation Between Jd Com Inc and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Jd Com Inc 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 Jd Com Inc and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jd Com Inc and Alibaba Group Holding, you can compare the effects of market volatilities on Jd Com Inc 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 Jd Com Inc with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jd Com Inc and Alibaba Group.
Diversification Opportunities for Jd Com Inc and Alibaba Group
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JDCMF and Alibaba is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Jd Com 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 Jd Com Inc 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 Jd Com 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 Jd Com Inc i.e., Jd Com Inc and Alibaba Group go up and down completely randomly.
Pair Corralation between Jd Com Inc and Alibaba Group
Assuming the 90 days horizon Jd Com Inc is expected to generate 1.43 times more return on investment than Alibaba Group. However, Jd Com Inc is 1.43 times more volatile than Alibaba Group Holding. It trades about -0.02 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.17 per unit of risk. If you would invest 1,876 in Jd Com Inc on August 29, 2024 and sell it today you would lose (103.00) from holding Jd Com Inc or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jd Com Inc vs. Alibaba Group Holding
Performance |
| Timeline |
| Jd Com Inc |
| Alibaba Group Holding |
Jd Com Inc and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jd Com Inc and Alibaba Group
The main advantage of trading using opposite Jd Com Inc and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jd Com Inc 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.| Jd Com Inc vs. 1StdibsCom | Jd Com Inc vs. Natural Health Trend | Jd Com Inc vs. Hour Loop | Jd Com Inc vs. Liquidity Services |
| Alibaba Group vs. Meituan ADR | Alibaba Group vs. Meituan | Alibaba Group vs. Qurate Retail Series | Alibaba Group vs. ThredUp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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