Correlation Between Baozun and Aptiv PLC
Can any of the company-specific risk be diversified away by investing in both Baozun and Aptiv 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 Aptiv 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 Aptiv PLC, you can compare the effects of market volatilities on Baozun and Aptiv 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 Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baozun and Aptiv PLC.
Diversification Opportunities for Baozun and Aptiv PLC
Poor diversification
The 3 months correlation between Baozun and Aptiv is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Baozun Inc and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv 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 Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Baozun i.e., Baozun and Aptiv PLC go up and down completely randomly.
Pair Corralation between Baozun and Aptiv PLC
Given the investment horizon of 90 days Baozun Inc is expected to under-perform the Aptiv PLC. In addition to that, Baozun is 1.41 times more volatile than Aptiv PLC. It trades about -0.36 of its total potential returns per unit of risk. Aptiv PLC is currently generating about -0.34 per unit of volatility. If you would invest 6,434 in Aptiv PLC on January 7, 2025 and sell it today you would lose (1,229) from holding Aptiv PLC or give up 19.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baozun Inc vs. Aptiv PLC
Performance |
| Timeline |
| Baozun Inc |
| Aptiv PLC |
Baozun and Aptiv PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baozun and Aptiv PLC
The main advantage of trading using opposite Baozun and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baozun position performs unexpectedly, Aptiv 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 Aptiv PLC will offset losses from the drop in Aptiv 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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