Correlation Between Alibaba Group and Mundoro Capital

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

Diversification Opportunities for Alibaba Group and Mundoro Capital

0.29

Correlation Coefficient

Alibaba Group  Mundoro Capital

Modest diversification

The 3 months correlation between Alibaba and Mundoro is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Mundoro Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundoro Capital 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 Mundoro Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundoro Capital has no effect on the direction of Alibaba Group i.e., Alibaba Group and Mundoro Capital go up and down completely randomly.

Pair Corralation between Alibaba Group and Mundoro Capital

Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 1.02 times more return on investment than Mundoro Capital. However, Alibaba Group is 1.02 times more volatile than Mundoro Capital. It trades about -0.01 of its potential returns per unit of risk. Mundoro Capital is currently generating about -0.11 per unit of risk. If you would invest  8,568  in Alibaba Group Holding on October 4, 2024 and sell it today you would lose (93.00) from holding Alibaba Group Holding or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

Alibaba Group Holding  vs.  Mundoro Capital

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.

Mundoro Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mundoro Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mundoro Capital is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Alibaba Group and Mundoro Capital

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

The idea behind Alibaba Group Holding and Mundoro Capital 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.