Correlation Between Ledesma SAAI and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Ledesma SAAI 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 Ledesma SAAI and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ledesma SAAI and Alibaba Group Holding, you can compare the effects of market volatilities on Ledesma SAAI 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 Ledesma SAAI with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ledesma SAAI and Alibaba Group.
Diversification Opportunities for Ledesma SAAI and Alibaba Group
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ledesma and Alibaba is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ledesma SAAI 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 Ledesma SAAI 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 Ledesma SAAI 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 Ledesma SAAI i.e., Ledesma SAAI and Alibaba Group go up and down completely randomly.
Pair Corralation between Ledesma SAAI and Alibaba Group
Assuming the 90 days trading horizon Ledesma SAAI is expected to generate 1.1 times more return on investment than Alibaba Group. However, Ledesma SAAI is 1.1 times more volatile than Alibaba Group Holding. It trades about 0.16 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.11 per unit of risk. If you would invest 149,500 in Ledesma SAAI on October 28, 2024 and sell it today you would earn a total of 9,000 from holding Ledesma SAAI or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ledesma SAAI vs. Alibaba Group Holding
Performance |
| Timeline |
| Ledesma SAAI |
| Alibaba Group Holding |
Ledesma SAAI and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ledesma SAAI and Alibaba Group
The main advantage of trading using opposite Ledesma SAAI and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ledesma SAAI 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.| Ledesma SAAI vs. Compania de Transporte | Ledesma SAAI vs. Agrometal SAI | Ledesma SAAI vs. United States Steel | Ledesma SAAI vs. Harmony Gold Mining |
| Alibaba Group vs. United States Steel | Alibaba Group vs. Transportadora de Gas | Alibaba Group vs. Agrometal SAI | Alibaba Group vs. Compania de Transporte |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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