Correlation Between Gentex and Baozun
Can any of the company-specific risk be diversified away by investing in both Gentex 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 Gentex and Baozun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and Baozun Inc, you can compare the effects of market volatilities on Gentex 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 Gentex with a short position of Baozun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and Baozun.
Diversification Opportunities for Gentex and Baozun
Good diversification
The 3 months correlation between Gentex and Baozun is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Baozun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baozun Inc and Gentex 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 Gentex 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 Gentex i.e., Gentex and Baozun go up and down completely randomly.
Pair Corralation between Gentex and Baozun
Given the investment horizon of 90 days Gentex is expected to under-perform the Baozun. But the stock apears to be less risky and, when comparing its historical volatility, Gentex is 3.75 times less risky than Baozun. The stock trades about -0.05 of its potential returns per unit of risk. The Baozun Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 223.00 in Baozun Inc on November 3, 2024 and sell it today you would earn a total of 100.00 from holding Baozun Inc or generate 44.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentex vs. Baozun Inc
Performance |
| Timeline |
| Gentex |
| Baozun Inc |
Gentex and Baozun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentex and Baozun
The main advantage of trading using opposite Gentex and Baozun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex 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.The idea behind Gentex and Baozun Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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