Correlation Between Alibaba Group and Cargile Fund

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

Diversification Opportunities for Alibaba Group and Cargile Fund

-0.65

Correlation Coefficient

Alibaba Group  Cargile Fund

Excellent diversification

The 3 months correlation between Alibaba and Cargile is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Cargile Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargile Fund 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 Cargile Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargile Fund has no effect on the direction of Alibaba Group i.e., Alibaba Group and Cargile Fund go up and down completely randomly.

Pair Corralation between Alibaba Group and Cargile Fund

Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the Cargile Fund. In addition to that, Alibaba Group is 4.07 times more volatile than Cargile Fund. It trades about -0.01 of its total potential returns per unit of risk. Cargile Fund is currently generating about 0.01 per unit of volatility. If you would invest  860.00  in Cargile Fund on October 4, 2024 and sell it today you would earn a total of  30.00  from holding Cargile Fund or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Alibaba Group Holding  vs.  Cargile Fund

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.

Cargile Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cargile Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Cargile Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alibaba Group and Cargile Fund

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

The idea behind Alibaba Group Holding and Cargile Fund 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 Global Correlations module to find global opportunities by holding instruments from different markets.