Correlation Between Liquidity Services and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Liquidity Services 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 Liquidity Services and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liquidity Services and Alibaba Group Holding, you can compare the effects of market volatilities on Liquidity Services 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 Liquidity Services with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liquidity Services and Alibaba Group.
Diversification Opportunities for Liquidity Services and Alibaba Group
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Liquidity and Alibaba is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Liquidity Services 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 Liquidity Services 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 Liquidity Services 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 Liquidity Services i.e., Liquidity Services and Alibaba Group go up and down completely randomly.
Pair Corralation between Liquidity Services and Alibaba Group
Given the investment horizon of 90 days Liquidity Services is expected to generate 0.6 times more return on investment than Alibaba Group. However, Liquidity Services is 1.66 times less risky than Alibaba Group. It trades about 0.07 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.01 per unit of risk. If you would invest 1,406 in Liquidity Services on August 27, 2024 and sell it today you would earn a total of 1,134 from holding Liquidity Services or generate 80.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liquidity Services vs. Alibaba Group Holding
Performance |
| Timeline |
| Liquidity Services |
| Alibaba Group Holding |
Liquidity Services and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liquidity Services and Alibaba Group
The main advantage of trading using opposite Liquidity Services and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liquidity Services 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.| Liquidity Services vs. Qurate Retail Series | Liquidity Services vs. Qurate Retail | Liquidity Services vs. Dada Nexus | Liquidity Services vs. Natural Health Trend |
| Alibaba Group vs. 1StdibsCom | Alibaba Group vs. Natural Health Trend | Alibaba Group vs. Hour Loop | Alibaba Group vs. Liquidity Services |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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