Correlation Between BARNETT INC and Alibaba Group

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

Diversification Opportunities for BARNETT INC and Alibaba Group

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between BARNETT and Alibaba is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BARNETT INC 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 BARNETT INC 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 BARNETT INC 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 BARNETT INC i.e., BARNETT INC and Alibaba Group go up and down completely randomly.

Pair Corralation between BARNETT INC and Alibaba Group

Given the investment horizon of 90 days BARNETT INC is expected to under-perform the Alibaba Group. But the stock apears to be less risky and, when comparing its historical volatility, BARNETT INC is 1.23 times less risky than Alibaba Group. The stock trades about -0.08 of its potential returns per unit of risk. The Alibaba Group Holding is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  24,714  in Alibaba Group Holding on April 8, 2022 and sell it today you would lose (12,398)  from holding Alibaba Group Holding or give up 50.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy69.22%
ValuesDaily Returns

BARNETT INC  vs.  Alibaba Group Holding

 Performance (%) 
      Timeline 
BARNETT INC 
BARNETT Performance
0 of 100
Over the last 90 days BARNETT INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BARNETT INC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Alibaba Group Holding 
Alibaba Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Group Holding are ranked lower than 6 (%) 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.

Alibaba Price Channel

BARNETT INC and Alibaba Group Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with BARNETT INC and Alibaba Group

The main advantage of trading using opposite BARNETT INC and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BARNETT INC 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.
The idea behind BARNETT INC 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.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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