Correlation Between Baozun and Kidpik Corp
Can any of the company-specific risk be diversified away by investing in both Baozun and Kidpik Corp 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 Kidpik Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baozun Inc and Kidpik Corp, you can compare the effects of market volatilities on Baozun and Kidpik Corp 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 Kidpik Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baozun and Kidpik Corp.
Diversification Opportunities for Baozun and Kidpik Corp
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baozun and Kidpik is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Baozun Inc and Kidpik Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kidpik Corp 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 Kidpik Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kidpik Corp has no effect on the direction of Baozun i.e., Baozun and Kidpik Corp go up and down completely randomly.
Pair Corralation between Baozun and Kidpik Corp
Given the investment horizon of 90 days Baozun Inc is expected to under-perform the Kidpik Corp. But the stock apears to be less risky and, when comparing its historical volatility, Baozun Inc is 1.96 times less risky than Kidpik Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Kidpik Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 462.00 in Kidpik Corp on August 24, 2024 and sell it today you would lose (239.00) from holding Kidpik Corp or give up 51.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baozun Inc vs. Kidpik Corp
Performance |
| Timeline |
| Baozun Inc |
| Kidpik Corp |
Baozun and Kidpik Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baozun and Kidpik Corp
The main advantage of trading using opposite Baozun and Kidpik Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baozun position performs unexpectedly, Kidpik Corp 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 Kidpik Corp will offset losses from the drop in Kidpik Corp'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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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