Correlation Between Alibaba Group and Eternit SA

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

Diversification Opportunities for Alibaba Group and Eternit SA

AlibabaEternitDiversified AwayAlibabaEternitDiversified Away100%
-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Alibaba and Eternit is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Eternit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternit SA 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 Eternit SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternit SA has no effect on the direction of Alibaba Group i.e., Alibaba Group and Eternit SA go up and down completely randomly.

Pair Corralation between Alibaba Group and Eternit SA

Assuming the 90 days trading horizon Alibaba Group Holding is expected to under-perform the Eternit SA. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 1.18 times less risky than Eternit SA. The stock trades about -0.07 of its potential returns per unit of risk. The Eternit SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  525.00  in Eternit SA on October 26, 2024 and sell it today you would lose (10.00) from holding Eternit SA or give up 1.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.31%
ValuesDaily Returns

Alibaba Group Holding  vs.  Eternit SA

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -15-10-5051015
JavaScript chart by amCharts 3.21.15BABA34 ETER3
       Timeline  
Alibaba Group Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan17.51818.51919.52020.521
Eternit SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eternit SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eternit SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan4.855.25.45.65.866.26.4

Alibaba Group and Eternit SA Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.99-2.99-1.99-0.98-0.01670.921.862.83.73 0.0450.0500.0550.0600.065
JavaScript chart by amCharts 3.21.15BABA34 ETER3
       Returns  

Pair Trading with Alibaba Group and Eternit SA

The main advantage of trading using opposite Alibaba Group and Eternit SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Eternit SA 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 Eternit SA will offset losses from the drop in Eternit SA's long position.
The idea behind Alibaba Group Holding and Eternit SA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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