Can any of the company-specific risk be diversified away by investing in both Baosheng Media and Travelzoo 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 Baosheng Media and Travelzoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baosheng Media Group and Travelzoo, you can compare the effects of market volatilities on Baosheng Media and Travelzoo 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 Baosheng Media with a short position of Travelzoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baosheng Media and Travelzoo.
Diversification Opportunities for Baosheng Media and Travelzoo
The 3 months correlation between Baosheng and Travelzoo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Baosheng Media Group and Travelzoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travelzoo and Baosheng Media 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 Baosheng Media Group are associated (or correlated) with Travelzoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travelzoo has no effect on the direction of Baosheng Media i.e., Baosheng Media and Travelzoo go up and down completely randomly.
Pair Corralation between Baosheng Media and Travelzoo
Given the investment horizon of 90 days Baosheng Media Group is expected to under-perform the Travelzoo. In addition to that, Baosheng Media is 2.21 times more volatile than Travelzoo. It trades about -0.24 of its total potential returns per unit of risk. Travelzoo is currently generating about -0.25 per unit of volatility. If you would invest 881.00 in Travelzoo on March 6, 2024 and sell it today you would lose (93.00) from holding Travelzoo or give up 10.56% of portfolio value over 90 days.
Over the last 90 days Baosheng Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Over the last 90 days Travelzoo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.