Correlation Between Boqii Holding and Sleep Number

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

Diversification Opportunities for Boqii Holding and Sleep Number

-0.57

Correlation Coefficient

Boqii Holding  Sleep Number

Excellent diversification

The 3 months correlation between Boqii and Sleep is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Boqii Holding Limited and Sleep Number Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleep Number Corp 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 Sleep Number. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleep Number Corp has no effect on the direction of Boqii Holding i.e., Boqii Holding and Sleep Number go up and down completely randomly.

Pair Corralation between Boqii Holding and Sleep Number

Allowing for the 90-day total investment horizon Boqii Holding Limited is expected to generate 1.24 times more return on investment than Sleep Number. However, Boqii Holding is 1.24 times more volatile than Sleep Number Corp. It trades about 0.17 of its potential returns per unit of risk. Sleep Number Corp is currently generating about -0.1 per unit of risk. If you would invest  25.00  in Boqii Holding Limited on February 1, 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.  Sleep Number Corp

Boqii Holding Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boqii Holding Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Boqii Holding may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Sleep Number Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sleep Number Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental drivers, Sleep Number reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boqii Holding and Sleep Number

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

The idea behind Boqii Holding Limited and Sleep Number Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.