Correlation Between Natural Health and Baozun
Can any of the company-specific risk be diversified away by investing in both Natural Health 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 Natural Health and Baozun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trend and Baozun Inc, you can compare the effects of market volatilities on Natural Health 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 Natural Health with a short position of Baozun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and Baozun.
Diversification Opportunities for Natural Health and Baozun
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Natural and Baozun is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trend and Baozun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baozun Inc and Natural Health 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 Natural Health Trend 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 Natural Health i.e., Natural Health and Baozun go up and down completely randomly.
Pair Corralation between Natural Health and Baozun
Given the investment horizon of 90 days Natural Health Trend is expected to generate 0.8 times more return on investment than Baozun. However, Natural Health Trend is 1.25 times less risky than Baozun. It trades about -0.05 of its potential returns per unit of risk. Baozun Inc is currently generating about -0.45 per unit of risk. If you would invest 582.00 in Natural Health Trend on August 27, 2024 and sell it today you would lose (19.00) from holding Natural Health Trend or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trend vs. Baozun Inc
Performance |
| Timeline |
| Natural Health Trend |
| Baozun Inc |
Natural Health and Baozun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and Baozun
The main advantage of trading using opposite Natural Health and Baozun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health 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.| Natural Health vs. Inter Parfums | Natural Health vs. European Wax Center | Natural Health vs. Yatsen Holding | Natural Health vs. Edgewell Personal Care |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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