Correlation Between Baozun Inc and EBay

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Can any of the company-specific risk be diversified away by investing in both Baozun Inc and EBay 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 EBay 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 EBay Inc, you can compare the effects of market volatilities on Baozun Inc and EBay 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 EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baozun Inc and EBay.

Diversification Opportunities for Baozun Inc and EBay

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Baozun and EBay is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Baozun Inc ADR and EBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBay Inc has no effect on the direction of Baozun Inc i.e., Baozun Inc and EBay go up and down completely randomly.

Pair Corralation between Baozun Inc and EBay

Given the investment horizon of 90 days Baozun Inc ADR is expected to under-perform the EBay. In addition to that, Baozun Inc is 1.6 times more volatile than EBay Inc. It trades about -0.12 of its total potential returns per unit of risk. EBay Inc is currently generating about 0.16 per unit of volatility. If you would invest  4,229  in EBay Inc on May 19, 2022 and sell it today you would earn a total of  611.00  from holding EBay Inc or generate 14.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Baozun Inc ADR  vs.  EBay Inc

 Performance (%) 
       Timeline  
Baozun Inc ADR 
Baozun Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Baozun Inc ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Baozun Inc may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Baozun Price Channel

EBay Inc 
EBay Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in EBay Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, EBay may actually be approaching a critical reversion point that can send shares even higher in September 2022.

EBay Price Channel

Baozun Inc and EBay Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baozun Inc and EBay

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

Baozun Inc ADR

Pair trading matchups for Baozun Inc

The idea behind Baozun Inc ADR and EBay Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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