Correlation Between Baozun and Griffon
Can any of the company-specific risk be diversified away by investing in both Baozun and Griffon 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 Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baozun Inc and Griffon, you can compare the effects of market volatilities on Baozun and Griffon 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 Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baozun and Griffon.
Diversification Opportunities for Baozun and Griffon
Very good diversification
The 3 months correlation between Baozun and Griffon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Baozun Inc and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon 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 Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of Baozun i.e., Baozun and Griffon go up and down completely randomly.
Pair Corralation between Baozun and Griffon
Given the investment horizon of 90 days Baozun Inc is expected to under-perform the Griffon. But the stock apears to be less risky and, when comparing its historical volatility, Baozun Inc is 1.0 times less risky than Griffon. The stock trades about -0.12 of its potential returns per unit of risk. The Griffon is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 6,339 in Griffon on September 4, 2024 and sell it today you would earn a total of 1,927 from holding Griffon or generate 30.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baozun Inc vs. Griffon
Performance |
| Timeline |
| Baozun Inc |
| Griffon |
Baozun and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baozun and Griffon
The main advantage of trading using opposite Baozun and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baozun position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.| Baozun vs. PDD Holdings | Baozun vs. JD Inc Adr | Baozun vs. Global E Online | Baozun vs. Vipshop Holdings Limited |
| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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