Correlation Between FLOW TRADERS and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Alibaba Group Holding, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Alibaba Group.
Diversification Opportunities for FLOW TRADERS and Alibaba Group
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FLOW and Alibaba is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD 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 FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and Alibaba Group go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Alibaba Group
Assuming the 90 days horizon FLOW TRADERS is expected to generate 1.0 times less return on investment than Alibaba Group. But when comparing it to its historical volatility, FLOW TRADERS LTD is 1.31 times less risky than Alibaba Group. It trades about 0.06 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 841.00 in Alibaba Group Holding on September 20, 2024 and sell it today you would earn a total of 194.00 from holding Alibaba Group Holding or generate 23.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. Alibaba Group Holding
Performance |
| Timeline |
| FLOW TRADERS LTD |
| Alibaba Group Holding |
FLOW TRADERS and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and Alibaba Group
The main advantage of trading using opposite FLOW TRADERS and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. JLT MOBILE PUTER | FLOW TRADERS vs. Treasury Wine Estates | FLOW TRADERS vs. Sabra Health Care | FLOW TRADERS vs. Cogent Communications Holdings |
| Alibaba Group vs. SANOK RUBBER ZY | Alibaba Group vs. Eidesvik Offshore ASA | Alibaba Group vs. FLOW TRADERS LTD | Alibaba Group vs. Applied Materials |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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