Correlation Between Alibaba Group and United Parcel
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and United Parcel 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 Group and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and United Parcel Service, you can compare the effects of market volatilities on Alibaba Group and United Parcel 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 Group with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and United Parcel.
Diversification Opportunities for Alibaba Group and United Parcel
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alibaba and United is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service and Alibaba Group 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 Group Holding are associated (or correlated) with United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Alibaba Group i.e., Alibaba Group and United Parcel go up and down completely randomly.
Pair Corralation between Alibaba Group and United Parcel
Assuming the 90 days trading horizon Alibaba Group Holding is expected to under-perform the United Parcel. In addition to that, Alibaba Group is 1.29 times more volatile than United Parcel Service. It trades about -0.12 of its total potential returns per unit of risk. United Parcel Service is currently generating about -0.07 per unit of volatility. If you would invest 15,684 in United Parcel Service on January 21, 2024 and sell it today you would lose (1,407) from holding United Parcel Service or give up 8.97% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 93.65% |
Values | Daily Returns |
Alibaba Group Holding vs. United Parcel Service
Performance |
Timeline |
Alibaba Group Holding |
United Parcel Service |
Alibaba Group and United Parcel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alibaba Group and United Parcel
The main advantage of trading using opposite Alibaba Group and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.Alibaba Group vs. Harmony Gold Mining | Alibaba Group vs. Transportadora de Gas | Alibaba Group vs. Compania de Transporte | Alibaba Group vs. Telecom Argentina |
Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
CEOs Directory Screen CEOs from public companies around the world |