Correlation Between RH and Boqii Holding

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

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

Diversification Opportunities for RH and Boqii Holding

-0.64

Correlation Coefficient

RH  Boqii Holding

Excellent diversification

The 3 months correlation between RH and Boqii is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding RH 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 RH 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 RH 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 RH i.e., RH and Boqii Holding go up and down completely randomly.

Pair Corralation between RH and Boqii Holding

Allowing for the 90-day total investment horizon RH is expected to generate 0.72 times more return on investment than Boqii Holding. However, RH is 1.4 times less risky than Boqii Holding. It trades about 0.07 of its potential returns per unit of risk. Boqii Holding Limited is currently generating about -0.12 per unit of risk. If you would invest  37,926  in RH on October 1, 2024 and sell it today you would earn a total of  1,881  from holding RH or generate 4.96% return on investment over 90 days.

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

RH  vs.  Boqii Holding Limited

RH

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RH are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, RH demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Boqii Holding Limited

Risk-Adjusted Performance

1 of 100

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.

Pair Trading with RH and Boqii Holding

The main advantage of trading using opposite RH and Boqii Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RH 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 RH 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.