Correlation Between Alibaba Group and Lightinthebox Holding

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Lightinthebox Holding 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 Lightinthebox Holding 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 Lightinthebox Holding Co, you can compare the effects of market volatilities on Alibaba Group and Lightinthebox Holding 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 Lightinthebox Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Lightinthebox Holding.

Diversification Opportunities for Alibaba Group and Lightinthebox Holding

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Alibaba and Lightinthebox is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Lightinthebox Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightinthebox Holding 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 Lightinthebox Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightinthebox Holding has no effect on the direction of Alibaba Group i.e., Alibaba Group and Lightinthebox Holding go up and down completely randomly.

Pair Corralation between Alibaba Group and Lightinthebox Holding

Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 1.08 times more return on investment than Lightinthebox Holding. However, Alibaba Group is 1.08 times more volatile than Lightinthebox Holding Co. It trades about -0.07 of its potential returns per unit of risk. Lightinthebox Holding Co is currently generating about -0.09 per unit of risk. If you would invest  10,803  in Alibaba Group Holding on May 16, 2022 and sell it today you would lose (1,326)  from holding Alibaba Group Holding or give up 12.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.67%
ValuesDaily Returns

Alibaba Group Holding  vs.  Lightinthebox Holding Co

 Performance (%) 
       Timeline  
Alibaba Group Holding 
Alibaba Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Group Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Alibaba Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Alibaba Price Channel

Lightinthebox Holding 
Lightinthebox Performance
0 of 100
Over the last 90 days Lightinthebox Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lightinthebox Price Channel

Alibaba Group and Lightinthebox Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alibaba Group and Lightinthebox Holding

The main advantage of trading using opposite Alibaba Group and Lightinthebox Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Lightinthebox Holding 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 Lightinthebox Holding will offset losses from the drop in Lightinthebox Holding's long position.
The idea behind Alibaba Group Holding and Lightinthebox Holding Co 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go