Correlation Between Levi Strauss and Bosideng International

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

By analyzing existing cross correlation between Levi Strauss Co and Bosideng International Holdings, you can compare the effects of market volatilities on Levi Strauss and Bosideng International 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 Levi Strauss with a short position of Bosideng International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Levi Strauss and Bosideng International.

Diversification Opportunities for Levi Strauss and Bosideng International

0.06

Correlation Coefficient

Levi Strauss  Bosideng International

Significant diversification

The 3 months correlation between Levi and Bosideng is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and Bosideng International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosideng International and Levi Strauss 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 Levi Strauss Co are associated (or correlated) with Bosideng International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosideng International has no effect on the direction of Levi Strauss i.e., Levi Strauss and Bosideng International go up and down completely randomly.

Pair Corralation between Levi Strauss and Bosideng International

Assuming the 90 days trading horizon Levi Strauss is expected to generate 2.31 times less return on investment than Bosideng International. But when comparing it to its historical volatility, Levi Strauss Co is 1.4 times less risky than Bosideng International. It trades about 0.04 of its potential returns per unit of risk. Bosideng International Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Bosideng International Holdings on December 1, 2024 and sell it today you would earn a total of  4.00  from holding Bosideng International Holdings or generate 9.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Levi Strauss Co  vs.  Bosideng International Holding

Levi Strauss

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Levi Strauss Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Levi Strauss is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bosideng International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bosideng International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bosideng International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Levi Strauss and Bosideng International

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

The idea behind Levi Strauss Co and Bosideng International Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.