Correlation Between Jetblack Corp and Alibaba Group

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Can any of the company-specific risk be diversified away by investing in both Jetblack Corp and Alibaba Group 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 Jetblack Corp and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jetblack Corp and Alibaba Group Holding, you can compare the effects of market volatilities on Jetblack Corp and Alibaba Group 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 Jetblack Corp with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jetblack Corp and Alibaba Group.

Diversification Opportunities for Jetblack Corp and Alibaba Group

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Jetblack and Alibaba is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Jetblack Corp and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Jetblack Corp 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 Jetblack Corp are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Jetblack Corp i.e., Jetblack Corp and Alibaba Group go up and down completely randomly.

Pair Corralation between Jetblack Corp and Alibaba Group

If you would invest (100.00) in Jetblack Corp on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Jetblack Corp or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Jetblack Corp  vs.  Alibaba Group Holding

 Performance 
       Timeline  
Jetblack Corp 

Risk-Adjusted Performance

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High
OK
Over the last 90 days Jetblack Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite weak fundamental drivers, Jetblack Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.
Alibaba Group Holding 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Jetblack Corp and Alibaba Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jetblack Corp and Alibaba Group

The main advantage of trading using opposite Jetblack Corp and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jetblack Corp position performs unexpectedly, Alibaba Group 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 Group will offset losses from the drop in Alibaba Group's long position.
The idea behind Jetblack Corp and Alibaba Group Holding 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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