Correlation Between Lekoil and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Lekoil 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 Lekoil and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lekoil Limited and Alibaba Group Holding, you can compare the effects of market volatilities on Lekoil 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 Lekoil with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lekoil and Alibaba Group.
Diversification Opportunities for Lekoil and Alibaba Group
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lekoil and Alibaba is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lekoil Limited 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 Lekoil 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 Lekoil Limited 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 Lekoil i.e., Lekoil and Alibaba Group go up and down completely randomly.
Pair Corralation between Lekoil and Alibaba Group
Assuming the 90 days horizon Lekoil is expected to generate 1.53 times less return on investment than Alibaba Group. In addition to that, Lekoil is 1.66 times more volatile than Alibaba Group Holding. It trades about 0.17 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.42 per unit of volatility. If you would invest 1,094 in Alibaba Group Holding on November 28, 2024 and sell it today you would earn a total of 512.00 from holding Alibaba Group Holding or generate 46.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lekoil Limited vs. Alibaba Group Holding
Performance |
| Timeline |
| Lekoil Limited |
| Alibaba Group Holding |
Risk-Adjusted Performance
Solid
Weak | Strong |
Lekoil and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lekoil and Alibaba Group
The main advantage of trading using opposite Lekoil and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lekoil 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.| Lekoil vs. Siemens Healthineers AG | Lekoil vs. CLOVER HEALTH INV | Lekoil vs. Beta Systems Software | Lekoil vs. Molina Healthcare |
| Alibaba Group vs. CompuGroup Medical SE | Alibaba Group vs. IMAGIN MEDICAL INC | Alibaba Group vs. Japan Medical Dynamic | Alibaba Group vs. CITY OFFICE REIT |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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