Correlation Between Raia Drogasil and Alibaba Health

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

By analyzing existing cross correlation between Raia Drogasil SA and Alibaba Health Information, you can compare the effects of market volatilities on Raia Drogasil and Alibaba Health 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 Raia Drogasil with a short position of Alibaba Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raia Drogasil and Alibaba Health.

Diversification Opportunities for Raia Drogasil and Alibaba Health

-0.4

Correlation Coefficient

Raia Drogasil  Alibaba Health

Very good diversification

The 3 months correlation between Raia and Alibaba is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Raia Drogasil SA and Alibaba Health Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Health Infor and Raia Drogasil 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 Raia Drogasil SA are associated (or correlated) with Alibaba Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Health Infor has no effect on the direction of Raia Drogasil i.e., Raia Drogasil and Alibaba Health go up and down completely randomly.

Pair Corralation between Raia Drogasil and Alibaba Health

Assuming the 90 days horizon Raia Drogasil SA is expected to under-perform the Alibaba Health. But the pink sheet apears to be less risky and, when comparing its historical volatility, Raia Drogasil SA is 1.41 times less risky than Alibaba Health. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Alibaba Health Information is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  752.00  in Alibaba Health Information on September 2, 2024 and sell it today you would earn a total of  170.00  from holding Alibaba Health Information or generate 22.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Raia Drogasil SA  vs.  Alibaba Health Information

Raia Drogasil SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raia Drogasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alibaba Health Infor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Health Information are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental drivers, Alibaba Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raia Drogasil and Alibaba Health

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

The idea behind Raia Drogasil SA and Alibaba Health Information 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.