Correlation Between Aecom Technology and Alibaba Group

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

Diversification Opportunities for Aecom Technology and Alibaba Group

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aecom and Alibaba is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aecom Technology 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 Aecom Technology 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 Aecom Technology 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 Aecom Technology i.e., Aecom Technology and Alibaba Group go up and down completely randomly.

Pair Corralation between Aecom Technology and Alibaba Group

Considering the 90-day investment horizon Aecom Technology Corp is expected to generate 0.49 times more return on investment than Alibaba Group. However, Aecom Technology Corp is 2.03 times less risky than Alibaba Group. It trades about 0.06 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.05 per unit of risk. If you would invest  4,402  in Aecom Technology Corp on June 28, 2022 and sell it today you would earn a total of  2,363  from holding Aecom Technology Corp or generate 53.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Aecom Technology Corp  vs.  Alibaba Group Holding

 Performance (%) 
       Timeline  
Aecom Technology Corp 
Aecom Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aecom Technology Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady fundamental indicators, Aecom Technology is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Aecom Price Channel

Alibaba Group Holding 
Alibaba Performance
0 of 100
Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Alibaba Price Channel

Aecom Technology and Alibaba Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aecom Technology and Alibaba Group

The main advantage of trading using opposite Aecom Technology and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecom Technology 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.
Aecom Technology vs. Sunrun Inc
The idea behind Aecom Technology 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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