Correlation Between Baosheng Media and Digital Brand

Can any of the company-specific risk be diversified away by investing in both Baosheng Media and Digital Brand 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 Baosheng Media and Digital Brand into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baosheng Media Group and Digital Brand Media, you can compare the effects of market volatilities on Baosheng Media and Digital Brand 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 Baosheng Media with a short position of Digital Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baosheng Media and Digital Brand.

Diversification Opportunities for Baosheng Media and Digital Brand

0.2

Correlation Coefficient

Baosheng Media  Digital Brand

Modest diversification

The 3 months correlation between Baosheng and Digital is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Baosheng Media Group and Digital Brand Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Brand Media and Baosheng Media 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 Baosheng Media Group are associated (or correlated) with Digital Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Brand Media has no effect on the direction of Baosheng Media i.e., Baosheng Media and Digital Brand go up and down completely randomly.

Pair Corralation between Baosheng Media and Digital Brand

Given the investment horizon of 90 days Baosheng Media Group is expected to generate 3.08 times more return on investment than Digital Brand. However, Baosheng Media is 3.08 times more volatile than Digital Brand Media. It trades about 0.08 of its potential returns per unit of risk. Digital Brand Media is currently generating about 0.0 per unit of risk. If you would invest  320.00  in Baosheng Media Group on October 7, 2024 and sell it today you would earn a total of  5.00  from holding Baosheng Media Group or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Baosheng Media Group  vs.  Digital Brand Media

Baosheng Media Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baosheng Media Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Baosheng Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Digital Brand Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Brand Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Digital Brand is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Baosheng Media and Digital Brand

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

The idea behind Baosheng Media Group and Digital Brand Media 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 Transaction History module to view history of all your transactions and understand their impact on performance.