Correlation Between Alibaba Health and Rite Aid

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Can any of the company-specific risk be diversified away by investing in both Alibaba Health and Rite Aid 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 Rite Aid 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 Rite Aid, you can compare the effects of market volatilities on Alibaba Health and Rite Aid 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 Rite Aid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Health and Rite Aid.

Diversification Opportunities for Alibaba Health and Rite Aid

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Alibaba and Rite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Health Information and Rite Aid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rite Aid 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 Rite Aid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rite Aid has no effect on the direction of Alibaba Health i.e., Alibaba Health and Rite Aid go up and down completely randomly.

Pair Corralation between Alibaba Health and Rite Aid

If you would invest  20.00  in Rite Aid on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Rite Aid or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Alibaba Health Information  vs.  Rite Aid

 Performance 
       Timeline  
Alibaba Health Infor 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Health Information are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Alibaba Health reported solid returns over the last few months and may actually be approaching a breakup point.
Rite Aid 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rite Aid has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rite Aid is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Alibaba Health and Rite Aid Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alibaba Health and Rite Aid

The main advantage of trading using opposite Alibaba Health and Rite Aid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Health position performs unexpectedly, Rite Aid 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 Rite Aid will offset losses from the drop in Rite Aid's long position.
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The idea behind Alibaba Health Information and Rite Aid 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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