Correlation Between Card Factory and Boqii Holding

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

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

Diversification Opportunities for Card Factory and Boqii Holding

0.02

Correlation Coefficient

Card Factory  Boqii Holding

Significant diversification

The 3 months correlation between Card and Boqii is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc and Boqii Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boqii Holding Limited and Card Factory 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 Card Factory plc are associated (or correlated) with Boqii Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boqii Holding Limited has no effect on the direction of Card Factory i.e., Card Factory and Boqii Holding go up and down completely randomly.

Pair Corralation between Card Factory and Boqii Holding

Assuming the 90 days horizon Card Factory plc is expected to under-perform the Boqii Holding. But the pink sheet apears to be less risky and, when comparing its historical volatility, Card Factory plc is 2.95 times less risky than Boqii Holding. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Boqii Holding Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Boqii Holding Limited on September 14, 2024 and sell it today you would lose (5.00) from holding Boqii Holding Limited or give up 12.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Card Factory plc  vs.  Boqii Holding Limited

Card Factory plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Card Factory plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 weak basic indicators, Boqii Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Card Factory and Boqii Holding

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

The idea behind Card Factory plc and Boqii Holding Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.