Correlation Between Entegris and ALIBABA

Can any of the company-specific risk be diversified away by investing in both Entegris and ALIBABA 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 Entegris and ALIBABA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entegris and ALIBABA GROUP HLDG, you can compare the effects of market volatilities on Entegris and ALIBABA 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 Entegris with a short position of ALIBABA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entegris and ALIBABA.

Diversification Opportunities for Entegris and ALIBABA

0.14

Correlation Coefficient

Entegris  ALIBABA

Average diversification

The 3 months correlation between Entegris and ALIBABA is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and ALIBABA GROUP HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIBABA GROUP HLDG and Entegris 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 Entegris are associated (or correlated) with ALIBABA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALIBABA GROUP HLDG has no effect on the direction of Entegris i.e., Entegris and ALIBABA go up and down completely randomly.

Pair Corralation between Entegris and ALIBABA

Given the investment horizon of 90 days Entegris is expected to under-perform the ALIBABA. In addition to that, Entegris is 4.84 times more volatile than ALIBABA GROUP HLDG. It trades about -0.06 of its total potential returns per unit of risk. ALIBABA GROUP HLDG is currently generating about 0.04 per unit of volatility. If you would invest  9,486  in ALIBABA GROUP HLDG on December 3, 2024 and sell it today you would earn a total of  80.00  from holding ALIBABA GROUP HLDG or generate 0.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.13%
Values	Daily Returns

Entegris  vs.  ALIBABA GROUP HLDG

Entegris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ALIBABA GROUP HLDG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALIBABA GROUP HLDG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ALIBABA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Entegris and ALIBABA

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

The idea behind Entegris and ALIBABA GROUP HLDG 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.