Correlation Between Promotora and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Promotora 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 Promotora and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and Alibaba Group Holding, you can compare the effects of market volatilities on Promotora 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 Promotora with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Alibaba Group.
Diversification Opportunities for Promotora and Alibaba Group
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Promotora and Alibaba is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora 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 Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and Alibaba Group go up and down completely randomly.
Pair Corralation between Promotora and Alibaba Group
Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 0.85 times more return on investment than Alibaba Group. However, Promotora y Operadora is 1.18 times less risky than Alibaba Group. It trades about 0.12 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.31 per unit of risk. If you would invest 18,001 in Promotora y Operadora on August 29, 2024 and sell it today you would earn a total of 710.00 from holding Promotora y Operadora or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Promotora y Operadora vs. Alibaba Group Holding
Performance |
| Timeline |
| Promotora y Operadora |
| Alibaba Group Holding |
Promotora and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and Alibaba Group
The main advantage of trading using opposite Promotora and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
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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