Correlation Between Baozun and Adient PLC
Can any of the company-specific risk be diversified away by investing in both Baozun and Adient PLC 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 Baozun and Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baozun Inc and Adient PLC, you can compare the effects of market volatilities on Baozun and Adient PLC 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 Baozun with a short position of Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baozun and Adient PLC.
Diversification Opportunities for Baozun and Adient PLC
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baozun and Adient is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Baozun Inc and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Baozun 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 Baozun Inc are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Baozun i.e., Baozun and Adient PLC go up and down completely randomly.
Pair Corralation between Baozun and Adient PLC
Given the investment horizon of 90 days Baozun Inc is expected to generate 1.94 times more return on investment than Adient PLC. However, Baozun is 1.94 times more volatile than Adient PLC. It trades about 0.02 of its potential returns per unit of risk. Adient PLC is currently generating about -0.09 per unit of risk. If you would invest 294.00 in Baozun Inc on September 12, 2024 and sell it today you would lose (20.00) from holding Baozun Inc or give up 6.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baozun Inc vs. Adient PLC
Performance |
| Timeline |
| Baozun Inc |
| Adient PLC |
Baozun and Adient PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baozun and Adient PLC
The main advantage of trading using opposite Baozun and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baozun position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.| Baozun vs. PDD Holdings | Baozun vs. JD Inc Adr | Baozun vs. Global E Online | Baozun vs. Vipshop Holdings Limited |
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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 the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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