Correlation Between Alibaba Group and Global X

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

Diversification Opportunities for Alibaba Group and Global X

-0.88

Correlation Coefficient

Alibaba Group  Global X

Pay attention - limited upside

The 3 months correlation between Alibaba and Global is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Global X USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X USD 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X USD has no effect on the direction of Alibaba Group i.e., Alibaba Group and Global X go up and down completely randomly.

Pair Corralation between Alibaba Group and Global X

Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the Global X. In addition to that, Alibaba Group is 29.37 times more volatile than Global X USD. It trades about -0.15 of its total potential returns per unit of risk. Global X USD is currently generating about 0.17 per unit of volatility. If you would invest  11,258  in Global X USD on October 6, 2024 and sell it today you would earn a total of  62.00  from holding Global X USD or generate 0.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Alibaba Group Holding  vs.  Global X USD

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.

Global X USD

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X USD are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global X is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alibaba Group and Global X

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

The idea behind Alibaba Group Holding and Global X USD 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.