Correlation Between Alibaba Group and MAYS J

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

Diversification Opportunities for Alibaba Group and MAYS J

-0.31

Correlation Coefficient

Alibaba Group  MAYS J

Very good diversification

The 3 months correlation between Alibaba and MAYS is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and MAYS J W in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAYS J W 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 MAYS J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAYS J W has no effect on the direction of Alibaba Group i.e., Alibaba Group and MAYS J go up and down completely randomly.

Pair Corralation between Alibaba Group and MAYS J

If you would invest (100.00) in MAYS J W on August 1, 2024 and sell it today you would earn a total of  100.00  from holding MAYS J W or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alibaba Group Holding  vs.  MAYS J W

Alibaba Group Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Group Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Alibaba Group sustained solid returns over the last few months and may actually be approaching a breakup point.

MAYS J W

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAYS J W has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MAYS J is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alibaba Group and MAYS J

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

The idea behind Alibaba Group Holding and MAYS J W 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.