Correlation Between Alibaba Group and Natixis Sustainable

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

Diversification Opportunities for Alibaba Group and Natixis Sustainable

-0.26

Correlation Coefficient

Alibaba Group  Natixis Sustainable

Very good diversification

The 3 months correlation between Alibaba and Natixis is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Natixis Sustainable Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis Sustainable 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 Natixis Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis Sustainable has no effect on the direction of Alibaba Group i.e., Alibaba Group and Natixis Sustainable go up and down completely randomly.

Pair Corralation between Alibaba Group and Natixis Sustainable

Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the Natixis Sustainable. In addition to that, Alibaba Group is 3.2 times more volatile than Natixis Sustainable Future. It trades about 0.0 of its total potential returns per unit of risk. Natixis Sustainable Future is currently generating about 0.04 per unit of volatility. If you would invest  1,117  in Natixis Sustainable Future on October 5, 2024 and sell it today you would earn a total of  160.00  from holding Natixis Sustainable Future or generate 14.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Alibaba Group Holding  vs.  Natixis Sustainable Future

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.

Natixis Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natixis Sustainable Future has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Natixis Sustainable 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 Natixis Sustainable

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

The idea behind Alibaba Group Holding and Natixis Sustainable Future 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.