Correlation Between Cleanaway Waste and Alibaba Health

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

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

Diversification Opportunities for Cleanaway Waste and Alibaba Health

-0.54

Correlation Coefficient

Cleanaway Waste  Alibaba Health

Excellent diversification

The 3 months correlation between Cleanaway and Alibaba is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management 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 Cleanaway Waste 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 Cleanaway Waste Management 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 Cleanaway Waste i.e., Cleanaway Waste and Alibaba Health go up and down completely randomly.

Pair Corralation between Cleanaway Waste and Alibaba Health

Assuming the 90 days trading horizon Cleanaway Waste is expected to generate 94.07 times less return on investment than Alibaba Health. But when comparing it to its historical volatility, Cleanaway Waste Management is 1.98 times less risky than Alibaba Health. It trades about 0.0 of its potential returns per unit of risk. Alibaba Health Information is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Alibaba Health Information on December 24, 2024 and sell it today you would earn a total of  17.00  from holding Alibaba Health Information or generate 40.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cleanaway Waste Management  vs.  Alibaba Health Information

Cleanaway Waste Mana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cleanaway Waste is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Alibaba Health Infor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Health Information are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Alibaba Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cleanaway Waste and Alibaba Health

The main advantage of trading using opposite Cleanaway Waste and Alibaba Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleanaway Waste 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 Cleanaway Waste Management 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.