Correlation Between Boqii Holding and Aarons

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

Diversification Opportunities for Boqii Holding and Aarons

0.82

Correlation Coefficient

Boqii Holding  Aarons

Very poor diversification

The 3 months correlation between Boqii and Aarons is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Boqii Holding Limited and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons 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 Aarons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarons has no effect on the direction of Boqii Holding i.e., Boqii Holding and Aarons go up and down completely randomly.

Pair Corralation between Boqii Holding and Aarons

Allowing for the 90-day total investment horizon Boqii Holding Limited is expected to generate 2.35 times more return on investment than Aarons. However, Boqii Holding is 2.35 times more volatile than The Aarons. It trades about 0.21 of its potential returns per unit of risk. The Aarons is currently generating about -0.11 per unit of risk. If you would invest  24.00  in Boqii Holding Limited on January 28, 2024 and sell it today you would earn a total of  6.00  from holding Boqii Holding Limited or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Boqii Holding Limited  vs.  The Aarons

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 uncertain 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.

Aarons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Aarons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Boqii Holding and Aarons

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

The idea behind Boqii Holding Limited and The Aarons 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.