Correlation Between Shenandoah Telecommunicatio and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenandoah Telecommunications and Alibaba Group Holding, you can compare the effects of market volatilities on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and Alibaba Group.
Diversification Opportunities for Shenandoah Telecommunicatio and Alibaba Group
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shenandoah and Alibaba is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications 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 Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and Alibaba Group go up and down completely randomly.
Pair Corralation between Shenandoah Telecommunicatio and Alibaba Group
Assuming the 90 days horizon Shenandoah Telecommunications is expected to under-perform the Alibaba Group. In addition to that, Shenandoah Telecommunicatio is 1.19 times more volatile than Alibaba Group Holding. It trades about -0.04 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.1 per unit of volatility. If you would invest 825.00 in Alibaba Group Holding on December 2, 2024 and sell it today you would earn a total of 737.00 from holding Alibaba Group Holding or generate 89.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenandoah Telecommunications vs. Alibaba Group Holding
Performance |
| Timeline |
| Shenandoah Telecommunicatio |
| Alibaba Group Holding |
Shenandoah Telecommunicatio and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenandoah Telecommunicatio and Alibaba Group
The main advantage of trading using opposite Shenandoah Telecommunicatio and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenandoah Telecommunicatio 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.The idea behind Shenandoah Telecommunications and Alibaba Group Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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