Correlation Between Ralph Lauren and Bosideng International

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

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

Diversification Opportunities for Ralph Lauren and Bosideng International

-0.29

Correlation Coefficient

Ralph Lauren  Bosideng International

Very good diversification

The 3 months correlation between Ralph and Bosideng is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren and Bosideng International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosideng International and Ralph Lauren 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 Ralph Lauren 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 Ralph Lauren i.e., Ralph Lauren and Bosideng International go up and down completely randomly.

Pair Corralation between Ralph Lauren and Bosideng International

Assuming the 90 days horizon Ralph Lauren is expected to under-perform the Bosideng International. In addition to that, Ralph Lauren is 1.03 times more volatile than Bosideng International Holdings. It trades about -0.03 of its total potential returns per unit of risk. Bosideng International Holdings is currently generating about 0.01 per unit of volatility. If you would invest  48.00  in Bosideng International Holdings on December 30, 2024 and sell it today you would lose (1.00) from holding Bosideng International Holdings or give up 2.08% of portfolio value over 90 days.

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

Ralph Lauren  vs.  Bosideng International Holding

Ralph Lauren

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ralph Lauren has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Bosideng International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bosideng International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bosideng International is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ralph Lauren and Bosideng International

The main advantage of trading using opposite Ralph Lauren and Bosideng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ralph Lauren 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 Ralph Lauren 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 Transaction History module to view history of all your transactions and understand their impact on performance.