Correlation Between Mondelez International and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Mondelez International 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 Mondelez International and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mondelez International and Alibaba Group Holding, you can compare the effects of market volatilities on Mondelez International 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 Mondelez International with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mondelez International and Alibaba Group.
Diversification Opportunities for Mondelez International and Alibaba Group
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mondelez and Alibaba is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mondelez International 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 Mondelez International 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 Mondelez International 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 Mondelez International i.e., Mondelez International and Alibaba Group go up and down completely randomly.
Pair Corralation between Mondelez International and Alibaba Group
Given the investment horizon of 90 days Mondelez International is expected to generate 11.29 times less return on investment than Alibaba Group. But when comparing it to its historical volatility, Mondelez International is 3.29 times less risky than Alibaba Group. It trades about 0.03 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 235,947 in Alibaba Group Holding on January 20, 2024 and sell it today you would earn a total of 586,403 from holding Alibaba Group Holding or generate 248.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.17% |
| Values | Daily Returns |
Mondelez International vs. Alibaba Group Holding
Performance |
| Timeline |
| Mondelez International |
| Alibaba Group Holding |
Mondelez International and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mondelez International and Alibaba Group
The main advantage of trading using opposite Mondelez International and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mondelez International 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.| Mondelez International vs. Green Globe International | Mondelez International vs. Greenlane Holdings | Mondelez International vs. 22nd Century Group | Mondelez International vs. 1606 Corp |
| Alibaba Group vs. Harmony Gold Mining | Alibaba Group vs. Compania de Transporte | Alibaba Group vs. B Gaming SA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |