Correlation Between Atlassian Corp and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Atlassian 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 Atlassian 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 Atlassian Corp Plc and Alibaba Group Holding, you can compare the effects of market volatilities on Atlassian 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 Atlassian Corp with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlassian Corp and Alibaba Group.
Diversification Opportunities for Atlassian Corp and Alibaba Group
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atlassian and Alibaba is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Atlassian Corp Plc 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 Atlassian 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 Atlassian Corp Plc 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 Atlassian Corp i.e., Atlassian Corp and Alibaba Group go up and down completely randomly.
Pair Corralation between Atlassian Corp and Alibaba Group
Given the investment horizon of 90 days Atlassian Corp is expected to generate 6.42 times less return on investment than Alibaba Group. In addition to that, Atlassian Corp is 1.05 times more volatile than Alibaba Group Holding. It trades about 0.01 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.09 per unit of volatility. If you would invest 223,247 in Alibaba Group Holding on January 19, 2024 and sell it today you would earn a total of 591,603 from holding Alibaba Group Holding or generate 265.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.17% |
| Values | Daily Returns |
Atlassian Corp Plc vs. Alibaba Group Holding
Performance |
| Timeline |
| Atlassian Corp Plc |
| Alibaba Group Holding |
Atlassian Corp and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlassian Corp and Alibaba Group
The main advantage of trading using opposite Atlassian Corp and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlassian 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.| Atlassian Corp vs. Workday | Atlassian Corp vs. Salesforce | Atlassian Corp vs. Intuit Inc | Atlassian Corp vs. Snowflake |
| Alibaba Group vs. Transportadora de Gas | Alibaba Group vs. Harmony Gold Mining | Alibaba Group vs. Compania de Transporte | Alibaba Group vs. United States Steel |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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