Correlation Between Baozun Inc and Advance Auto

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

Diversification Opportunities for Baozun Inc and Advance Auto

0.27
  Correlation Coefficient

Modest diversification

The 1 month correlation between Baozun and Advance is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Baozun Inc ADR and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts and Baozun Inc 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 ADR are associated (or correlated) with Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of Baozun Inc i.e., Baozun Inc and Advance Auto go up and down completely randomly.

Pair Corralation between Baozun Inc and Advance Auto

Given the investment horizon of 90 days Baozun Inc ADR is expected to under-perform the Advance Auto. In addition to that, Baozun Inc is 2.74 times more volatile than Advance Auto Parts. It trades about -0.03 of its total potential returns per unit of risk. Advance Auto Parts is currently generating about 0.04 per unit of volatility. If you would invest  13,992  in Advance Auto Parts on April 8, 2022 and sell it today you would earn a total of  4,185  from holding Advance Auto Parts or generate 29.91% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Baozun Inc ADR  vs.  Advance Auto Parts

 Performance (%) 
      Timeline 
Baozun Inc ADR 
Baozun Performance
0 of 100
Over the last 90 days Baozun Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Baozun Inc is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Baozun Price Channel

Advance Auto Parts 
Advance Performance
0 of 100
Over the last 90 days Advance Auto Parts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Advance Auto is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.033
Payout Ratio
0.41
Last Split Factor
3:2
Forward Annual Dividend Rate
6.0
Dividend Date
2022-07-01
Ex Dividend Date
2022-06-16
Last Split Date
2005-09-26

Advance Price Channel

Baozun Inc and Advance Auto Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Baozun Inc and Advance Auto

The main advantage of trading using opposite Baozun Inc and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baozun Inc position performs unexpectedly, Advance Auto 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 Advance Auto will offset losses from the drop in Advance Auto's long position.
The idea behind Baozun Inc ADR and Advance Auto Parts 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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