Correlation Between CVW CleanTech and Baozun
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Baozun 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 CVW CleanTech and Baozun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Baozun Inc, you can compare the effects of market volatilities on CVW CleanTech and Baozun 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 CVW CleanTech with a short position of Baozun. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Baozun.
Diversification Opportunities for CVW CleanTech and Baozun
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVW and Baozun is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Baozun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baozun Inc and CVW CleanTech 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 CVW CleanTech are associated (or correlated) with Baozun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baozun Inc has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Baozun go up and down completely randomly.
Pair Corralation between CVW CleanTech and Baozun
Assuming the 90 days horizon CVW CleanTech is expected to generate 1.67 times more return on investment than Baozun. However, CVW CleanTech is 1.67 times more volatile than Baozun Inc. It trades about 0.03 of its potential returns per unit of risk. Baozun Inc is currently generating about -0.01 per unit of risk. If you would invest 68.00 in CVW CleanTech on September 12, 2024 and sell it today you would lose (3.00) from holding CVW CleanTech or give up 4.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CleanTech vs. Baozun Inc
Performance |
| Timeline |
| CVW CleanTech |
| Baozun Inc |
CVW CleanTech and Baozun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Baozun
The main advantage of trading using opposite CVW CleanTech and Baozun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Baozun 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 Baozun will offset losses from the drop in Baozun's long position.| CVW CleanTech vs. Legacy Education | CVW CleanTech vs. Apple Inc | CVW CleanTech vs. NVIDIA | CVW CleanTech vs. Microsoft |
| Baozun vs. PDD Holdings | Baozun vs. JD Inc Adr | Baozun vs. Global E Online | Baozun vs. Vipshop Holdings Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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