Correlation Between Boqii Holding and Sunlands Technology

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

Diversification Opportunities for Boqii Holding and Sunlands Technology

0.69

Correlation Coefficient

Boqii Holding  Sunlands Technology

Poor diversification

The 3 months correlation between Boqii and Sunlands is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Boqii Holding Limited and Sunlands Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunlands Technology 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 Sunlands Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunlands Technology has no effect on the direction of Boqii Holding i.e., Boqii Holding and Sunlands Technology go up and down completely randomly.

Pair Corralation between Boqii Holding and Sunlands Technology

Allowing for the 90-day total investment horizon Boqii Holding Limited is expected to under-perform the Sunlands Technology. In addition to that, Boqii Holding is 1.37 times more volatile than Sunlands Technology Group. It trades about -0.07 of its total potential returns per unit of risk. Sunlands Technology Group is currently generating about -0.03 per unit of volatility. If you would invest  690.00  in Sunlands Technology Group on October 4, 2024 and sell it today you would lose (125.00) from holding Sunlands Technology Group or give up 18.12% of portfolio value over 90 days.

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

Boqii Holding Limited  vs.  Sunlands Technology Group

Boqii Holding Limited

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Sunlands Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunlands Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Boqii Holding and Sunlands Technology

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

The idea behind Boqii Holding Limited and Sunlands Technology Group 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.