Correlation Between Ring Energy and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Ring Energy 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 Ring Energy and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ring Energy and Alibaba Group Holding, you can compare the effects of market volatilities on Ring Energy 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 Ring Energy with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ring Energy and Alibaba Group.
Diversification Opportunities for Ring Energy and Alibaba Group
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ring and Alibaba is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ring Energy 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 Ring Energy 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 Ring Energy 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 Ring Energy i.e., Ring Energy and Alibaba Group go up and down completely randomly.
Pair Corralation between Ring Energy and Alibaba Group
Assuming the 90 days trading horizon Ring Energy is expected to generate 1.36 times more return on investment than Alibaba Group. However, Ring Energy is 1.36 times more volatile than Alibaba Group Holding. It trades about 0.08 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.18 per unit of risk. If you would invest 136.00 in Ring Energy on September 5, 2024 and sell it today you would earn a total of 8.00 from holding Ring Energy or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ring Energy vs. Alibaba Group Holding
Performance |
| Timeline |
| Ring Energy |
| Alibaba Group Holding |
Ring Energy and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ring Energy and Alibaba Group
The main advantage of trading using opposite Ring Energy and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ring Energy 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.| Ring Energy vs. Alibaba Group Holding | Ring Energy vs. Occidental Petroleum | Ring Energy vs. WOODSIDE ENE SPADR | Ring Energy vs. Woodside Energy Group |
| Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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