Correlation Between Boqii Holding and Pet Acquisition

Can any of the company-specific risk be diversified away by investing in both Boqii Holding and Pet Acquisition 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 Boqii Holding and Pet Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boqii Holding Limited and Pet Acquisition LLC, you can compare the effects of market volatilities on Boqii Holding and Pet Acquisition 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 Boqii Holding with a short position of Pet Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boqii Holding and Pet Acquisition.

Diversification Opportunities for Boqii Holding and Pet Acquisition

0.34

Correlation Coefficient

Boqii Holding  Pet Acquisition

Weak diversification

The 3 months correlation between Boqii and Pet is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Boqii Holding Limited and Pet Acquisition LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pet Acquisition LLC and Boqii Holding 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 Boqii Holding Limited are associated (or correlated) with Pet Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pet Acquisition LLC has no effect on the direction of Boqii Holding i.e., Boqii Holding and Pet Acquisition go up and down completely randomly.

Pair Corralation between Boqii Holding and Pet Acquisition

Allowing for the 90-day total investment horizon Boqii Holding is expected to generate 2.37 times less return on investment than Pet Acquisition. But when comparing it to its historical volatility, Boqii Holding Limited is 1.33 times less risky than Pet Acquisition. It trades about 0.27 of its potential returns per unit of risk. Pet Acquisition LLC is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Pet Acquisition LLC on February 29, 2024 and sell it today you would earn a total of  186.00  from holding Pet Acquisition LLC or generate 119.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Boqii Holding Limited  vs.  Pet Acquisition LLC

Boqii Holding Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boqii Holding Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Boqii Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pet Acquisition LLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pet Acquisition LLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Pet Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boqii Holding and Pet Acquisition

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

The idea behind Boqii Holding Limited and Pet Acquisition LLC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.