Correlation Between Alibaba Group and Custodia Holding

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

Diversification Opportunities for Alibaba Group and Custodia Holding

0.0

Correlation Coefficient

Alibaba Group  Custodia Holding

Pay attention - limited upside

The 3 months correlation between Alibaba and Custodia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Custodia Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custodia Holding 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 Custodia Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custodia Holding has no effect on the direction of Alibaba Group i.e., Alibaba Group and Custodia Holding go up and down completely randomly.

Pair Corralation between Alibaba Group and Custodia Holding

If you would invest  8,589  in Alibaba Group Holding on October 5, 2024 and sell it today you would lose (35.00) from holding Alibaba Group Holding or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alibaba Group Holding  vs.  Custodia Holding AG

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.

Custodia Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Custodia Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Custodia Holding is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Alibaba Group and Custodia Holding

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

The idea behind Alibaba Group Holding and Custodia Holding AG 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.