Correlation Between Alibaba Group and EBay

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

Diversification Opportunities for Alibaba Group and EBay

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Alibaba and EBay is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and EBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBay Inc has no effect on the direction of Alibaba Group i.e., Alibaba Group and EBay go up and down completely randomly.

Pair Corralation between Alibaba Group and EBay

Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the EBay. In addition to that, Alibaba Group is 1.63 times more volatile than EBay Inc. It trades about -0.02 of its total potential returns per unit of risk. EBay Inc is currently generating about -0.02 per unit of volatility. If you would invest  5,757  in EBay Inc on April 5, 2022 and sell it today you would lose (1,468)  from holding EBay Inc or give up 25.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Alibaba Group Holding  vs.  EBay Inc

 Performance (%) 
      Timeline 
Alibaba Group Holding 
Alibaba Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Group Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Alibaba Group may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Alibaba Price Channel

EBay Inc 
EBay Performance
0 of 100
Over the last 90 days EBay Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0206
Payout Ratio
0.2
Last Split Factor
2376:1000
Forward Annual Dividend Rate
0.88
Dividend Date
2022-06-17
Ex Dividend Date
2022-05-31
Last Split Date
2015-07-20

EBay Price Channel

Alibaba Group and EBay Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alibaba Group and EBay

The main advantage of trading using opposite Alibaba Group and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.
The idea behind Alibaba Group Holding and EBay Inc 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.
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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