Correlation Between Boqii Holding and Groupon

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

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

Diversification Opportunities for Boqii Holding and Groupon

-0.4

Correlation Coefficient

Boqii Holding  Groupon

Very good diversification

The 3 months correlation between Boqii and Groupon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Boqii Holding Limited and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Boqii Holding 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 Boqii Holding Limited are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Boqii Holding i.e., Boqii Holding and Groupon go up and down completely randomly.

Pair Corralation between Boqii Holding and Groupon

Allowing for the 90-day total investment horizon Boqii Holding Limited is expected to under-perform the Groupon. In addition to that, Boqii Holding is 1.14 times more volatile than Groupon. It trades about -0.09 of its total potential returns per unit of risk. Groupon is currently generating about 0.23 per unit of volatility. If you would invest  938.00  in Groupon on September 29, 2024 and sell it today you would earn a total of  255.00  from holding Groupon or generate 27.19% return on investment over 90 days.

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

Boqii Holding Limited  vs.  Groupon

Boqii Holding Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boqii Holding Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Boqii Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Groupon

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Boqii Holding and Groupon

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

The idea behind Boqii Holding Limited and Groupon 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.