Correlation Between Baosheng Media and Liberty Media

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

Diversification Opportunities for Baosheng Media and Liberty Media

-0.64

Correlation Coefficient

Baosheng Media  Liberty Media

Excellent diversification

The 3 months correlation between Baosheng and Liberty is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Baosheng Media Group and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media has no effect on the direction of Baosheng Media i.e., Baosheng Media and Liberty Media go up and down completely randomly.

Pair Corralation between Baosheng Media and Liberty Media

Given the investment horizon of 90 days Baosheng Media Group is expected to generate 8.6 times more return on investment than Liberty Media. However, Baosheng Media is 8.6 times more volatile than Liberty Media. It trades about 0.03 of its potential returns per unit of risk. Liberty Media is currently generating about 0.06 per unit of risk. If you would invest  564.00  in Baosheng Media Group on September 4, 2024 and sell it today you would lose (374.00) from holding Baosheng Media Group or give up 66.31% of portfolio value over 90 days.

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

Baosheng Media Group  vs.  Liberty Media

Baosheng Media Group

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Baosheng Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Liberty Media

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Liberty Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baosheng Media and Liberty Media

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

The idea behind Baosheng Media Group and Liberty 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.