Correlation Between Baozun and Qurate Retail

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

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

Diversification Opportunities for Baozun and Qurate Retail

0.36

Correlation Coefficient

Baozun  Qurate Retail

Weak diversification

The 3 months correlation between Baozun and Qurate is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Baozun Inc and Qurate Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail and Baozun 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 Baozun Inc are associated (or correlated) with Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail has no effect on the direction of Baozun i.e., Baozun and Qurate Retail go up and down completely randomly.

Pair Corralation between Baozun and Qurate Retail

Given the investment horizon of 90 days Baozun Inc is expected to generate 1.56 times more return on investment than Qurate Retail. However, Baozun is 1.56 times more volatile than Qurate Retail. It trades about 0.03 of its potential returns per unit of risk. Qurate Retail is currently generating about -0.05 per unit of risk. If you would invest  276.00  in Baozun Inc on December 29, 2024 and sell it today you would earn a total of  4.00  from holding Baozun Inc or generate 1.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.16%
Values	Daily Returns

Baozun Inc  vs.  Qurate Retail

Baozun Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baozun Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Baozun may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Qurate Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qurate Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Baozun and Qurate Retail

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

The idea behind Baozun Inc and Qurate Retail 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.