Correlation Between Emerge Commerce and Baozun
Can any of the company-specific risk be diversified away by investing in both Emerge Commerce 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 Emerge Commerce and Baozun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerge Commerce and Baozun Inc, you can compare the effects of market volatilities on Emerge Commerce 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 Emerge Commerce with a short position of Baozun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerge Commerce and Baozun.
Diversification Opportunities for Emerge Commerce and Baozun
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Emerge and Baozun is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Emerge Commerce and Baozun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baozun Inc and Emerge Commerce 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 Emerge Commerce 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 Emerge Commerce i.e., Emerge Commerce and Baozun go up and down completely randomly.
Pair Corralation between Emerge Commerce and Baozun
Assuming the 90 days horizon Emerge Commerce is expected to generate 59.76 times more return on investment than Baozun. However, Emerge Commerce is 59.76 times more volatile than Baozun Inc. It trades about 0.22 of its potential returns per unit of risk. Baozun Inc is currently generating about -0.31 per unit of risk. If you would invest 0.12 in Emerge Commerce on August 28, 2024 and sell it today you would earn a total of 2.39 from holding Emerge Commerce or generate 1991.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerge Commerce vs. Baozun Inc
Performance |
| Timeline |
| Emerge Commerce |
| Baozun Inc |
Emerge Commerce and Baozun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerge Commerce and Baozun
The main advantage of trading using opposite Emerge Commerce and Baozun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerge Commerce 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.| Emerge Commerce vs. 1StdibsCom | Emerge Commerce vs. Natural Health Trend | Emerge Commerce vs. Hour Loop | Emerge Commerce vs. Liquidity Services |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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