Correlation Between Natural Hlth and Alibaba Group

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

Diversification Opportunities for Natural Hlth and Alibaba Group

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Natural and Alibaba is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Natural Hlth Trd 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 Natural Hlth 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 Natural Hlth Trd 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 Natural Hlth i.e., Natural Hlth and Alibaba Group go up and down completely randomly.

Pair Corralation between Natural Hlth and Alibaba Group

Given the investment horizon of 90 days Natural Hlth Trd is expected to generate 0.83 times more return on investment than Alibaba Group. However, Natural Hlth Trd is 1.2 times less risky than Alibaba Group. It trades about -0.1 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.09 per unit of risk. If you would invest  643.00  in Natural Hlth Trd on May 11, 2022 and sell it today you would lose (93.00)  from holding Natural Hlth Trd or give up 14.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Natural Hlth Trd  vs.  Alibaba Group Holding

 Performance (%) 
       Timeline  
Natural Hlth Trd 
Natural Performance
0 of 100
Over the last 90 days Natural Hlth Trd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Natural Price Channel

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 fragile fundamental drivers, Alibaba Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Alibaba Price Channel

Natural Hlth and Alibaba Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Natural Hlth and Alibaba Group

The main advantage of trading using opposite Natural Hlth and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Hlth 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.

Natural Hlth Trd

Pair trading matchups for Natural Hlth

The idea behind Natural Hlth Trd 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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