Correlation Between Alibaba Health and Infrastrutture Wireless

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

Diversification Opportunities for Alibaba Health and Infrastrutture Wireless

-0.55

Correlation Coefficient

Alibaba Health  Infrastrutture Wireless

Excellent diversification

The 3 months correlation between Alibaba and Infrastrutture is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Health Information and Infrastrutture Wireless Italia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastrutture Wireless 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 Infrastrutture Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastrutture Wireless has no effect on the direction of Alibaba Health i.e., Alibaba Health and Infrastrutture Wireless go up and down completely randomly.

Pair Corralation between Alibaba Health and Infrastrutture Wireless

Assuming the 90 days trading horizon Alibaba Health Information is expected to generate 3.68 times more return on investment than Infrastrutture Wireless. However, Alibaba Health is 3.68 times more volatile than Infrastrutture Wireless Italiane. It trades about 0.16 of its potential returns per unit of risk. Infrastrutture Wireless Italiane is currently generating about 0.0 per unit of risk. If you would invest  43.00  in Alibaba Health Information on December 4, 2024 and sell it today you would earn a total of  20.00  from holding Alibaba Health Information or generate 46.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Alibaba Health Information  vs.  Infrastrutture Wireless Italia

Alibaba Health Infor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Health Information are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alibaba Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Infrastrutture Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Infrastrutture Wireless is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alibaba Health and Infrastrutture Wireless

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

The idea behind Alibaba Health Information and Infrastrutture Wireless Italiane 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.