Correlation Between Alibaba Group and Coupang
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Coupang 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 Group and Coupang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holdings and Coupang, you can compare the effects of market volatilities on Alibaba Group and Coupang 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 Group with a short position of Coupang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Coupang.
Diversification Opportunities for Alibaba Group and Coupang
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alibaba and Coupang is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holdings and Coupang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang and Alibaba Group 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 Group Holdings are associated (or correlated) with Coupang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang has no effect on the direction of Alibaba Group i.e., Alibaba Group and Coupang go up and down completely randomly.
Pair Corralation between Alibaba Group and Coupang
Assuming the 90 days trading horizon Alibaba Group is expected to generate 2.74 times less return on investment than Coupang. But when comparing it to its historical volatility, Alibaba Group Holdings is 1.05 times less risky than Coupang. It trades about 0.01 of its potential returns per unit of risk. Coupang is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,645 in Coupang on September 5, 2024 and sell it today you would earn a total of 631.00 from holding Coupang or generate 38.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Alibaba Group Holdings vs. Coupang
Performance |
Timeline |
Alibaba Group Holdings |
Coupang |
Alibaba Group and Coupang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alibaba Group and Coupang
The main advantage of trading using opposite Alibaba Group and Coupang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Coupang 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 Coupang will offset losses from the drop in Coupang's long position.Alibaba Group vs. Tencent Holdings | Alibaba Group vs. Amazon Inc | Alibaba Group vs. Microsoft | Alibaba Group vs. Apple Inc |
Coupang vs. FEMALE HEALTH | Coupang vs. Apollo Investment Corp | Coupang vs. Genco Shipping Trading | Coupang vs. National Health Investors |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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