Correlation Between Alibaba Health and Gaztransport Technigaz
Can any of the company-specific risk be diversified away by investing in both Alibaba Health and Gaztransport Technigaz 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 Alibaba Health and Gaztransport Technigaz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Health Information and Gaztransport Technigaz SA, you can compare the effects of market volatilities on Alibaba Health and Gaztransport Technigaz 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 Alibaba Health with a short position of Gaztransport Technigaz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Health and Gaztransport Technigaz.
Diversification Opportunities for Alibaba Health and Gaztransport Technigaz
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alibaba and Gaztransport is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Health Information and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and Alibaba Health 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 Alibaba Health Information are associated (or correlated) with Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of Alibaba Health i.e., Alibaba Health and Gaztransport Technigaz go up and down completely randomly.
Pair Corralation between Alibaba Health and Gaztransport Technigaz
Assuming the 90 days horizon Alibaba Health Information is expected to generate 2.31 times more return on investment than Gaztransport Technigaz. However, Alibaba Health is 2.31 times more volatile than Gaztransport Technigaz SA. It trades about 0.2 of its potential returns per unit of risk. Gaztransport Technigaz SA is currently generating about 0.17 per unit of risk. If you would invest 40.00 in Alibaba Health Information on November 7, 2024 and sell it today you would earn a total of 5.00 from holding Alibaba Health Information or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Health Information vs. Gaztransport Technigaz SA
Performance |
| Timeline |
| Alibaba Health Infor |
| Gaztransport Technigaz |
Alibaba Health and Gaztransport Technigaz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Health and Gaztransport Technigaz
The main advantage of trading using opposite Alibaba Health and Gaztransport Technigaz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Health position performs unexpectedly, Gaztransport Technigaz 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 Gaztransport Technigaz will offset losses from the drop in Gaztransport Technigaz's long position.| Alibaba Health vs. RCI Hospitality Holdings | Alibaba Health vs. MPH Health Care | Alibaba Health vs. Sims Metal Management | Alibaba Health vs. Corporate Office Properties |
| Gaztransport Technigaz vs. Fuji Media Holdings | Gaztransport Technigaz vs. Global Ship Lease | Gaztransport Technigaz vs. Live Nation Entertainment | Gaztransport Technigaz vs. United Rentals |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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