Correlation Between Alibaba Group and Mogu Inc

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

Diversification Opportunities for Alibaba Group and Mogu Inc

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Alibaba and Mogu Inc is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Mogu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mogu Inc ADR 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 Mogu Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mogu Inc ADR has no effect on the direction of Alibaba Group i.e., Alibaba Group and Mogu Inc go up and down completely randomly.

Pair Corralation between Alibaba Group and Mogu Inc

Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 0.68 times more return on investment than Mogu Inc. However, Alibaba Group Holding is 1.48 times less risky than Mogu Inc. It trades about 0.03 of its potential returns per unit of risk. Mogu Inc ADR is currently generating about -0.12 per unit of risk. If you would invest  11,509  in Alibaba Group Holding on March 28, 2022 and sell it today you would earn a total of  253.00  from holding Alibaba Group Holding or generate 2.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Alibaba Group Holding  vs.  Mogu Inc ADR

 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 uncertain fundamental drivers, Alibaba Group may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Alibaba Price Channel

Mogu Inc ADR 
Mogu Inc Performance
0 of 100
Over the last 90 days Mogu Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Structure and Payout Changes

Last Split Factor
1:12
Last Split Date
2022-03-28

Mogu Inc Price Channel

Alibaba Group and Mogu Inc Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alibaba Group and Mogu Inc

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

Alibaba Group Holding

Pair trading matchups for Alibaba Group

The idea behind Alibaba Group Holding and Mogu Inc ADR 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.

Mogu Inc ADR

Pair trading matchups for Mogu Inc

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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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