Correlation Between Baosheng Media and Direct Digital

Can any of the company-specific risk be diversified away by investing in both Baosheng Media and Direct Digital 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 Direct Digital 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 Direct Digital Holdings, you can compare the effects of market volatilities on Baosheng Media and Direct Digital 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 Direct Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baosheng Media and Direct Digital.

Diversification Opportunities for Baosheng Media and Direct Digital

0.39

Correlation Coefficient

Baosheng Media  Direct Digital

Weak diversification

The 3 months correlation between Baosheng and Direct is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Baosheng Media Group and Direct Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Digital Holdings 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 Direct Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Digital Holdings has no effect on the direction of Baosheng Media i.e., Baosheng Media and Direct Digital go up and down completely randomly.

Pair Corralation between Baosheng Media and Direct Digital

Given the investment horizon of 90 days Baosheng Media Group is expected to generate 0.8 times more return on investment than Direct Digital. However, Baosheng Media Group is 1.25 times less risky than Direct Digital. It trades about -0.02 of its potential returns per unit of risk. Direct Digital Holdings is currently generating about -0.02 per unit of risk. If you would invest  348.00  in Baosheng Media Group on December 29, 2024 and sell it today you would lose (106.00) from holding Baosheng Media Group or give up 30.46% of portfolio value over 90 days.

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

Baosheng Media Group  vs.  Direct Digital Holdings

Baosheng Media Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baosheng Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Direct Digital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direct Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Baosheng Media and Direct Digital

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

The idea behind Baosheng Media Group and Direct Digital Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.