Correlation Between Canadian Natural and Alibaba Group

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

By analyzing existing cross correlation between Canadian Natural Resources and Alibaba Group Holding, you can compare the effects of market volatilities on Canadian Natural 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 Canadian Natural with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Alibaba Group.

Diversification Opportunities for Canadian Natural and Alibaba Group

-0.18

Correlation Coefficient

Canadian Natural  Alibaba Group

Good diversification

The 3 months correlation between Canadian and Alibaba is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources 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 Canadian Natural 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 Canadian Natural Resources 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 Canadian Natural i.e., Canadian Natural and Alibaba Group go up and down completely randomly.

Pair Corralation between Canadian Natural and Alibaba Group

Assuming the 90 days horizon Canadian Natural Resources is expected to generate 0.67 times more return on investment than Alibaba Group. However, Canadian Natural Resources is 1.5 times less risky than Alibaba Group. It trades about 0.05 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.03 per unit of risk. If you would invest  2,506  in Canadian Natural Resources on April 22, 2025 and sell it today you would earn a total of  141.00  from holding Canadian Natural Resources or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Canadian Natural Resources  vs.  Alibaba Group Holding

Canadian Natural Res

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Natural Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Canadian Natural may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Alibaba Group Holding

Risk-Adjusted Performance

Weak

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 nearly stable basic indicators, Alibaba Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Canadian Natural and Alibaba Group

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

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.