Correlation Between Alibaba Group and Knights Of

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

Diversification Opportunities for Alibaba Group and Knights Of

-0.62

Correlation Coefficient

Alibaba Group  Knights Of

Excellent diversification

The 3 months correlation between Alibaba and Knights is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Knights Of Umbus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knights Of Umbus 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 Knights Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knights Of Umbus has no effect on the direction of Alibaba Group i.e., Alibaba Group and Knights Of go up and down completely randomly.

Pair Corralation between Alibaba Group and Knights Of

Given the investment horizon of 90 days Alibaba Group is expected to generate 3.53 times less return on investment than Knights Of. In addition to that, Alibaba Group is 2.59 times more volatile than Knights Of Umbus. It trades about 0.01 of its total potential returns per unit of risk. Knights Of Umbus is currently generating about 0.12 per unit of volatility. If you would invest  1,186  in Knights Of Umbus on October 21, 2024 and sell it today you would earn a total of  939.00  from holding Knights Of Umbus or generate 79.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Alibaba Group Holding  vs.  Knights Of Umbus

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.

Knights Of Umbus

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Knights Of Umbus are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Knights Of 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 Knights Of

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

The idea behind Alibaba Group Holding and Knights Of Umbus 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.