Correlation Between Alibaba Group and Xiangpiaopiao Food

Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Xiangpiaopiao Food 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 Xiangpiaopiao Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alibaba Group Holding and Xiangpiaopiao Food Co, you can compare the effects of market volatilities on Alibaba Group and Xiangpiaopiao Food 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 Xiangpiaopiao Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Xiangpiaopiao Food.

Diversification Opportunities for Alibaba Group and Xiangpiaopiao Food

-0.78

Correlation Coefficient

Alibaba Group  Xiangpiaopiao Food

Pay attention - limited upside

The 3 months correlation between Alibaba and Xiangpiaopiao is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Xiangpiaopiao Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangpiaopiao Food 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 Holding are associated (or correlated) with Xiangpiaopiao Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangpiaopiao Food has no effect on the direction of Alibaba Group i.e., Alibaba Group and Xiangpiaopiao Food go up and down completely randomly.

Pair Corralation between Alibaba Group and Xiangpiaopiao Food

Given the investment horizon of 90 days Alibaba Group is expected to generate 3.06 times less return on investment than Xiangpiaopiao Food. But when comparing it to its historical volatility, Alibaba Group Holding is 1.47 times less risky than Xiangpiaopiao Food. It trades about 0.01 of its potential returns per unit of risk. Xiangpiaopiao Food Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,718  in Xiangpiaopiao Food Co on October 4, 2024 and sell it today you would earn a total of  18.00  from holding Xiangpiaopiao Food Co or generate 1.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.77%
Values	Daily Returns

Alibaba Group Holding  vs.  Xiangpiaopiao Food Co

Alibaba Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Xiangpiaopiao Food

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangpiaopiao Food Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangpiaopiao Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alibaba Group and Xiangpiaopiao Food

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

The idea behind Alibaba Group Holding and Xiangpiaopiao Food Co 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..