Correlation Between Boqii Holding and Floor Decor

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

Diversification Opportunities for Boqii Holding and Floor Decor

-0.59

Correlation Coefficient

Boqii Holding  Floor Decor

Excellent diversification

The 3 months correlation between Boqii and Floor is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Boqii Holding Limited and Floor Decor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floor Decor Holdings 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 Floor Decor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floor Decor Holdings has no effect on the direction of Boqii Holding i.e., Boqii Holding and Floor Decor go up and down completely randomly.

Pair Corralation between Boqii Holding and Floor Decor

Allowing for the 90-day total investment horizon Boqii Holding Limited is expected to generate 2.63 times more return on investment than Floor Decor. However, Boqii Holding is 2.63 times more volatile than Floor Decor Holdings. It trades about 0.18 of its potential returns per unit of risk. Floor Decor Holdings is currently generating about -0.28 per unit of risk. If you would invest  25.00  in Boqii Holding Limited on January 30, 2024 and sell it today you would earn a total of  5.00  from holding Boqii Holding Limited or generate 20.0% return on investment over 90 days.

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

Boqii Holding Limited  vs.  Floor Decor Holdings

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Floor Decor Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Floor Decor Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Floor Decor may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Boqii Holding and Floor Decor

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

The idea behind Boqii Holding Limited and Floor Decor Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.