Correlation Between Alibaba Health and ALIBHLINFTECUNSPADR

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

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

Diversification Opportunities for Alibaba Health and ALIBHLINFTECUNSPADR

0.97

Correlation Coefficient

Alibaba Health  ALIBHLINFTECUNSPADR

Almost no diversification

The 3 months correlation between Alibaba and ALIBHLINFTECUNSPADR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Health Information and ALIBHLINFTECUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIBHLINFTECUNSPADR and Alibaba Health 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 Health Information are associated (or correlated) with ALIBHLINFTECUNSPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALIBHLINFTECUNSPADR has no effect on the direction of Alibaba Health i.e., Alibaba Health and ALIBHLINFTECUNSPADR go up and down completely randomly.

Pair Corralation between Alibaba Health and ALIBHLINFTECUNSPADR

Assuming the 90 days trading horizon Alibaba Health is expected to generate 1.05 times less return on investment than ALIBHLINFTECUNSPADR. But when comparing it to its historical volatility, Alibaba Health Information is 1.22 times less risky than ALIBHLINFTECUNSPADR. It trades about 0.13 of its potential returns per unit of risk. ALIBHLINFTECUNSPADR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  830.00  in ALIBHLINFTECUNSPADR on December 30, 2024 and sell it today you would earn a total of  310.00  from holding ALIBHLINFTECUNSPADR or generate 37.35% return on investment over 90 days.

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

Alibaba Health Information  vs.  ALIBHLINFTECUNSPADR

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 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Alibaba Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

ALIBHLINFTECUNSPADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALIBHLINFTECUNSPADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALIBHLINFTECUNSPADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alibaba Health and ALIBHLINFTECUNSPADR

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

The idea behind Alibaba Health Information and ALIBHLINFTECUNSPADR 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.