Correlation Between Advance Auto and Boqii Holding

Can any of the company-specific risk be diversified away by investing in both Advance Auto and Boqii Holding 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 Advance Auto and Boqii Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advance Auto Parts and Boqii Holding Limited, you can compare the effects of market volatilities on Advance Auto and Boqii Holding 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 Advance Auto with a short position of Boqii Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Boqii Holding.

Diversification Opportunities for Advance Auto and Boqii Holding

0.72

Correlation Coefficient

Advance Auto  Boqii Holding

Poor diversification

The 3 months correlation between Advance and Boqii is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Boqii Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boqii Holding Limited and Advance Auto 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 Advance Auto Parts are associated (or correlated) with Boqii Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boqii Holding Limited has no effect on the direction of Advance Auto i.e., Advance Auto and Boqii Holding go up and down completely randomly.

Pair Corralation between Advance Auto and Boqii Holding

Considering the 90-day investment horizon Advance Auto Parts is expected to generate 0.57 times more return on investment than Boqii Holding. However, Advance Auto Parts is 1.74 times less risky than Boqii Holding. It trades about -0.04 of its potential returns per unit of risk. Boqii Holding Limited is currently generating about -0.11 per unit of risk. If you would invest  4,580  in Advance Auto Parts on December 28, 2024 and sell it today you would lose (543.00) from holding Advance Auto Parts or give up 11.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Advance Auto Parts  vs.  Boqii Holding Limited

Advance Auto Parts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advance Auto Parts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Boqii Holding Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boqii Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Advance Auto and Boqii Holding

The main advantage of trading using opposite Advance Auto and Boqii Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, Boqii Holding 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 Boqii Holding will offset losses from the drop in Boqii Holding's long position.

The idea behind Advance Auto Parts and Boqii Holding Limited 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.