Correlation Between Baozun and CVW CleanTech
Can any of the company-specific risk be diversified away by investing in both Baozun and CVW CleanTech 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 CVW CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baozun Inc and CVW CleanTech, you can compare the effects of market volatilities on Baozun and CVW CleanTech 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 CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baozun and CVW CleanTech.
Diversification Opportunities for Baozun and CVW CleanTech
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Baozun and CVW is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Baozun Inc and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech 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 CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Baozun i.e., Baozun and CVW CleanTech go up and down completely randomly.
Pair Corralation between Baozun and CVW CleanTech
Given the investment horizon of 90 days Baozun Inc is expected to under-perform the CVW CleanTech. In addition to that, Baozun is 4.78 times more volatile than CVW CleanTech. It trades about -0.06 of its total potential returns per unit of risk. CVW CleanTech is currently generating about 0.18 per unit of volatility. If you would invest 59.00 in CVW CleanTech on September 4, 2024 and sell it today you would earn a total of 2.00 from holding CVW CleanTech or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Baozun Inc vs. CVW CleanTech
Performance |
| Timeline |
| Baozun Inc |
| CVW CleanTech |
Baozun and CVW CleanTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baozun and CVW CleanTech
The main advantage of trading using opposite Baozun and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baozun position performs unexpectedly, CVW CleanTech 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 CVW CleanTech will offset losses from the drop in CVW CleanTech's long position.| Baozun vs. PDD Holdings | Baozun vs. JD Inc Adr | Baozun vs. Global E Online | Baozun vs. Vipshop Holdings Limited |
| CVW CleanTech vs. Meiwu Technology Co | CVW CleanTech vs. CECO Environmental Corp | CVW CleanTech vs. Iridium Communications | CVW CleanTech vs. Aldel Financial II |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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