Correlation Between Mosaic and Baozun
Can any of the company-specific risk be diversified away by investing in both Mosaic 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 Mosaic and Baozun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Mosaic and Baozun Inc, you can compare the effects of market volatilities on Mosaic 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 Mosaic with a short position of Baozun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mosaic and Baozun.
Diversification Opportunities for Mosaic and Baozun
Significant diversification
The 3 months correlation between Mosaic and Baozun is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding The Mosaic and Baozun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baozun Inc and Mosaic 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 The Mosaic 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 Mosaic i.e., Mosaic and Baozun go up and down completely randomly.
Pair Corralation between Mosaic and Baozun
Considering the 90-day investment horizon The Mosaic is expected to under-perform the Baozun. But the stock apears to be less risky and, when comparing its historical volatility, The Mosaic is 1.87 times less risky than Baozun. The stock trades about -0.02 of its potential returns per unit of risk. The Baozun Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 255.00 in Baozun Inc on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Baozun Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Mosaic vs. Baozun Inc
Performance |
| Timeline |
| Mosaic |
| Baozun Inc |
Mosaic and Baozun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mosaic and Baozun
The main advantage of trading using opposite Mosaic and Baozun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mosaic 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 The Mosaic 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.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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