Correlation Between Xponential Fitness and Baozun

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

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

Diversification Opportunities for Xponential Fitness and Baozun

-0.65

Correlation Coefficient

Xponential Fitness  Baozun

Excellent diversification

The 3 months correlation between Xponential and Baozun is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Baozun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baozun Inc and Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and Baozun go up and down completely randomly.

Pair Corralation between Xponential Fitness and Baozun

Given the investment horizon of 90 days Xponential Fitness is expected to generate 2.73 times less return on investment than Baozun. But when comparing it to its historical volatility, Xponential Fitness is 1.23 times less risky than Baozun. It trades about 0.03 of its potential returns per unit of risk. Baozun Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  242.00  in Baozun Inc on September 12, 2024 and sell it today you would earn a total of  35.00  from holding Baozun Inc or generate 14.46% return on investment over 90 days.

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

Xponential Fitness  vs.  Baozun Inc

Xponential Fitness

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Baozun Inc

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baozun Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Baozun displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xponential Fitness and Baozun

The main advantage of trading using opposite Xponential Fitness and Baozun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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 Xponential Fitness 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.