Correlation Between Boqii Holding and Penske Automotive

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

Diversification Opportunities for Boqii Holding and Penske Automotive

-0.31

Correlation Coefficient

Boqii Holding  Penske Automotive

Very good diversification

The 3 months correlation between Boqii and Penske is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Boqii Holding Limited and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive 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 Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of Boqii Holding i.e., Boqii Holding and Penske Automotive go up and down completely randomly.

Pair Corralation between Boqii Holding and Penske Automotive

Allowing for the 90-day total investment horizon Boqii Holding Limited is expected to generate 7.22 times more return on investment than Penske Automotive. However, Boqii Holding is 7.22 times more volatile than Penske Automotive Group. It trades about 0.02 of its potential returns per unit of risk. Penske Automotive Group is currently generating about 0.05 per unit of risk. If you would invest  142.00  in Boqii Holding Limited on September 29, 2024 and sell it today you would lose (108.00) from holding Boqii Holding Limited or give up 76.06% of portfolio value over 90 days.

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

Boqii Holding Limited  vs.  Penske Automotive Group

Boqii Holding Limited

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boqii Holding Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Boqii Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Penske Automotive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Penske Automotive Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Penske Automotive is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boqii Holding and Penske Automotive

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

The idea behind Boqii Holding Limited and Penske Automotive Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.