Correlation Between Alibaba Group and Stryker

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

Diversification Opportunities for Alibaba Group and Stryker

-0.87

Correlation Coefficient

Alibaba Group  Stryker

Pay attention - limited upside

The 3 months correlation between Alibaba and Stryker is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of Alibaba Group i.e., Alibaba Group and Stryker go up and down completely randomly.

Pair Corralation between Alibaba Group and Stryker

Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the Stryker. In addition to that, Alibaba Group is 1.83 times more volatile than Stryker. It trades about -0.01 of its total potential returns per unit of risk. Stryker is currently generating about 0.07 per unit of volatility. If you would invest  23,393  in Stryker on October 5, 2024 and sell it today you would earn a total of  11,497  from holding Stryker or generate 49.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.8%
Values	Daily Returns

Alibaba Group Holding  vs.  Stryker

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.

Stryker

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Stryker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Stryker may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alibaba Group and Stryker

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

The idea behind Alibaba Group Holding and Stryker 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.