Correlation Between Alibaba Group and KORE Group

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

Diversification Opportunities for Alibaba Group and KORE Group

0.21

Correlation Coefficient

Alibaba Group  KORE Group

Modest diversification

The 3 months correlation between Alibaba and KORE is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and KORE Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KORE Group Holdings 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 KORE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KORE Group Holdings has no effect on the direction of Alibaba Group i.e., Alibaba Group and KORE Group go up and down completely randomly.

Pair Corralation between Alibaba Group and KORE Group

Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the KORE Group. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 3.95 times less risky than KORE Group. The stock trades about -0.1 of its potential returns per unit of risk. The KORE Group Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  208.00  in KORE Group Holdings on October 23, 2024 and sell it today you would earn a total of  15.00  from holding KORE Group Holdings or generate 7.21% return on investment over 90 days.

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

Alibaba Group Holding  vs.  KORE Group Holdings

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.

KORE Group Holdings

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KORE Group Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, KORE Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alibaba Group and KORE Group

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

The idea behind Alibaba Group Holding and KORE Group Holdings 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.