Correlation Between MSAD INSURANCE and Alibaba Health

Can any of the company-specific risk be diversified away by investing in both MSAD INSURANCE and Alibaba Health 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 MSAD INSURANCE and Alibaba Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MSAD INSURANCE and Alibaba Health Information, you can compare the effects of market volatilities on MSAD INSURANCE and Alibaba Health 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 MSAD INSURANCE with a short position of Alibaba Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSAD INSURANCE and Alibaba Health.

Diversification Opportunities for MSAD INSURANCE and Alibaba Health

0.31

Correlation Coefficient

MSAD INSURANCE  Alibaba Health

Weak diversification

The 3 months correlation between MSAD and Alibaba is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding MSAD INSURANCE and Alibaba Health Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Health Infor and MSAD INSURANCE 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 MSAD INSURANCE are associated (or correlated) with Alibaba Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Health Infor has no effect on the direction of MSAD INSURANCE i.e., MSAD INSURANCE and Alibaba Health go up and down completely randomly.

Pair Corralation between MSAD INSURANCE and Alibaba Health

Assuming the 90 days trading horizon MSAD INSURANCE is expected to generate 0.41 times more return on investment than Alibaba Health. However, MSAD INSURANCE is 2.47 times less risky than Alibaba Health. It trades about 0.1 of its potential returns per unit of risk. Alibaba Health Information is currently generating about -0.01 per unit of risk. If you would invest  973.00  in MSAD INSURANCE on September 12, 2024 and sell it today you would earn a total of  1,187  from holding MSAD INSURANCE or generate 121.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MSAD INSURANCE  vs.  Alibaba Health Information

MSAD INSURANCE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MSAD INSURANCE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, MSAD INSURANCE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Alibaba Health Infor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Health Information are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Alibaba Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSAD INSURANCE and Alibaba Health

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

The idea behind MSAD INSURANCE and Alibaba Health Information 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.

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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 the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.