Correlation Between Longvie SA and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Longvie SA 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 Longvie SA and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longvie SA and Alibaba Group Holding, you can compare the effects of market volatilities on Longvie SA 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 Longvie SA with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longvie SA and Alibaba Group.
Diversification Opportunities for Longvie SA and Alibaba Group
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Longvie and Alibaba is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Longvie SA 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 Longvie SA 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 Longvie SA 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 Longvie SA i.e., Longvie SA and Alibaba Group go up and down completely randomly.
Pair Corralation between Longvie SA and Alibaba Group
Assuming the 90 days trading horizon Longvie SA is expected to generate 101.0 times less return on investment than Alibaba Group. In addition to that, Longvie SA is 1.0 times more volatile than Alibaba Group Holding. It trades about 0.0 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.06 per unit of volatility. If you would invest 1,192,500 in Alibaba Group Holding on November 2, 2024 and sell it today you would earn a total of 160,000 from holding Alibaba Group Holding or generate 13.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longvie SA vs. Alibaba Group Holding
Performance |
| Timeline |
| Longvie SA |
| Alibaba Group Holding |
Longvie SA and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longvie SA and Alibaba Group
The main advantage of trading using opposite Longvie SA and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longvie SA 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.| Longvie SA vs. Fiplasto SA | Longvie SA vs. Domec Compania de | Longvie SA vs. International Business Machines |
| Alibaba Group vs. Transportadora de Gas | Alibaba Group vs. Harmony Gold Mining | 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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