Correlation Between Alibaba Group and Envela Corp

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

Diversification Opportunities for Alibaba Group and Envela Corp

-0.67

Correlation Coefficient

Alibaba Group  Envela Corp

Excellent diversification

The 3 months correlation between Alibaba and Envela is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Envela Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envela Corp 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 Envela Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envela Corp has no effect on the direction of Alibaba Group i.e., Alibaba Group and Envela Corp go up and down completely randomly.

Pair Corralation between Alibaba Group and Envela Corp

Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the Envela Corp. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 1.59 times less risky than Envela Corp. The stock trades about 0.0 of its potential returns per unit of risk. The Envela Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  645.00  in Envela Corp on October 5, 2024 and sell it today you would earn a total of  25.00  from holding Envela Corp or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.16%
Values	Daily Returns

Alibaba Group Holding  vs.  Envela Corp

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.

Envela Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Envela Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Envela Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alibaba Group and Envela Corp

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

The idea behind Alibaba Group Holding and Envela Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .