Correlation Between Gap, and Boqii Holding

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

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

Diversification Opportunities for Gap, and Boqii Holding

-0.31

Correlation Coefficient

Gap,  Boqii Holding

Very good diversification

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

Pair Corralation between Gap, and Boqii Holding

Considering the 90-day investment horizon The Gap, is expected to generate 0.86 times more return on investment than Boqii Holding. However, The Gap, is 1.17 times less risky than Boqii Holding. It trades about 0.2 of its potential returns per unit of risk. Boqii Holding Limited is currently generating about -0.44 per unit of risk. If you would invest  2,136  in The Gap, on September 18, 2024 and sell it today you would earn a total of  335.50  from holding The Gap, or generate 15.71% return on investment over 90 days.

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

The Gap,  vs.  Boqii Holding Limited

Gap,

Risk-Adjusted Performance

10 of 100

OK

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

Boqii Holding Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gap, and Boqii Holding

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

The idea behind The Gap, and Boqii Holding Limited 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.