Correlation Between Alibaba Health and PetMed Express

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

Diversification Opportunities for Alibaba Health and PetMed Express

-0.75

Correlation Coefficient

Alibaba Health  PetMed Express

Pay attention - limited upside

The 3 months correlation between Alibaba and PetMed is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Health Information and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express 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 PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of Alibaba Health i.e., Alibaba Health and PetMed Express go up and down completely randomly.

Pair Corralation between Alibaba Health and PetMed Express

Assuming the 90 days horizon Alibaba Health Information is expected to generate 1.92 times more return on investment than PetMed Express. However, Alibaba Health is 1.92 times more volatile than PetMed Express. It trades about 0.12 of its potential returns per unit of risk. PetMed Express is currently generating about -0.05 per unit of risk. If you would invest  43.00  in Alibaba Health Information on December 29, 2024 and sell it today you would earn a total of  22.00  from holding Alibaba Health Information or generate 51.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Alibaba Health Information  vs.  PetMed Express

Alibaba Health Infor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Health Information are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Alibaba Health reported solid returns over the last few months and may actually be approaching a breakup point.

PetMed Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days PetMed Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Alibaba Health and PetMed Express

The main advantage of trading using opposite Alibaba Health and PetMed Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Health position performs unexpectedly, PetMed Express 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 PetMed Express will offset losses from the drop in PetMed Express' long position.

The idea behind Alibaba Health Information and PetMed Express 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.