Correlation Between Best Buy and Miniso Group

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Can any of the company-specific risk be diversified away by investing in both Best Buy and Miniso Group 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 Best Buy and Miniso Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Best Buy Co and Miniso Group HoldingLtd, you can compare the effects of market volatilities on Best Buy and Miniso Group 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 Best Buy with a short position of Miniso Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Best Buy and Miniso Group.

Diversification Opportunities for Best Buy and Miniso Group

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Best Buy and Miniso is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Best Buy Co and Miniso Group HoldingLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miniso Group HoldingLtd and Best Buy 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 Best Buy Co are associated (or correlated) with Miniso Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miniso Group HoldingLtd has no effect on the direction of Best Buy i.e., Best Buy and Miniso Group go up and down completely randomly.

Pair Corralation between Best Buy and Miniso Group

Considering the 90-day investment horizon Best Buy Co is expected to under-perform the Miniso Group. But the stock apears to be less risky and, when comparing its historical volatility, Best Buy Co is 2.16 times less risky than Miniso Group. The stock trades about -0.01 of its potential returns per unit of risk. The Miniso Group HoldingLtd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,070  in Miniso Group HoldingLtd on September 5, 2022 and sell it today you would earn a total of  126.00  from holding Miniso Group HoldingLtd or generate 11.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.6%
ValuesDaily Returns

Best Buy Co  vs.  Miniso Group HoldingLtd

 Performance (%) 
       Timeline  
Best Buy 
Best Buy Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Best Buy Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental drivers, Best Buy showed solid returns over the last few months and may actually be approaching a breakup point.

Best Buy Price Channel

Miniso Group HoldingLtd 
Miniso Performance
16 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Miniso Group HoldingLtd are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Miniso Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Miniso Price Channel

Best Buy and Miniso Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Best Buy and Miniso Group

The main advantage of trading using opposite Best Buy and Miniso Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Best Buy position performs unexpectedly, Miniso Group 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 Miniso Group will offset losses from the drop in Miniso Group's long position.
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The idea behind Best Buy Co and Miniso Group HoldingLtd 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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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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