Correlation Between Broadridge Financial and Baozun

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

By analyzing existing cross correlation between Broadridge Financial Solutions and Baozun Inc, you can compare the effects of market volatilities on Broadridge Financial and Baozun 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 Broadridge Financial with a short position of Baozun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadridge Financial and Baozun.

Diversification Opportunities for Broadridge Financial and Baozun

-0.01

Correlation Coefficient

Broadridge Financial  Baozun

Good diversification

The 3 months correlation between Broadridge and Baozun is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Baozun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baozun Inc and Broadridge Financial 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 Broadridge Financial Solutions are associated (or correlated) with Baozun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baozun Inc has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Baozun go up and down completely randomly.

Pair Corralation between Broadridge Financial and Baozun

Allowing for the 90-day total investment horizon Broadridge Financial Solutions is expected to under-perform the Baozun. But the stock apears to be less risky and, when comparing its historical volatility, Broadridge Financial Solutions is 2.9 times less risky than Baozun. The stock trades about -0.19 of its potential returns per unit of risk. The Baozun Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  229.00  in Baozun Inc on January 24, 2024 and sell it today you would earn a total of  15.00  from holding Baozun Inc or generate 6.55% return on investment over 90 days.

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

Broadridge Financial Solutions  vs.  Baozun Inc

Broadridge Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadridge Financial Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Broadridge Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Baozun Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baozun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Broadridge Financial and Baozun

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

The idea behind Broadridge Financial Solutions and Baozun 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.