Correlation Between Duluth Holdings and Baozun

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

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

Diversification Opportunities for Duluth Holdings and Baozun

-0.43

Correlation Coefficient

Duluth Holdings  Baozun

Very good diversification

The 3 months correlation between Duluth and Baozun is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Duluth Holdings and Baozun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baozun Inc and Duluth Holdings 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 Duluth Holdings 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 Duluth Holdings i.e., Duluth Holdings and Baozun go up and down completely randomly.

Pair Corralation between Duluth Holdings and Baozun

Given the investment horizon of 90 days Duluth Holdings is expected to generate 0.74 times more return on investment than Baozun. However, Duluth Holdings is 1.35 times less risky than Baozun. It trades about 0.06 of its potential returns per unit of risk. Baozun Inc is currently generating about 0.01 per unit of risk. If you would invest  436.00  in Duluth Holdings on February 28, 2024 and sell it today you would earn a total of  13.00  from holding Duluth Holdings or generate 2.98% return on investment over 90 days.

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

Duluth Holdings  vs.  Baozun Inc

Duluth Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duluth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Duluth Holdings is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Baozun Inc

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baozun Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Baozun displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Duluth Holdings and Baozun

The main advantage of trading using opposite Duluth Holdings and Baozun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duluth Holdings 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 Duluth Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.