Correlation Between Direct Digital and Baosheng Media

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

By analyzing existing cross correlation between Direct Digital Holdings and Baosheng Media Group, you can compare the effects of market volatilities on Direct Digital and Baosheng Media 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 Direct Digital with a short position of Baosheng Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Digital and Baosheng Media.

Diversification Opportunities for Direct Digital and Baosheng Media

0.8

Correlation Coefficient

Direct Digital  Baosheng Media

Very poor diversification

The 3 months correlation between Direct and Baosheng is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings and Baosheng Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baosheng Media Group and Direct Digital 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 Direct Digital Holdings are associated (or correlated) with Baosheng Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baosheng Media Group has no effect on the direction of Direct Digital i.e., Direct Digital and Baosheng Media go up and down completely randomly.

Pair Corralation between Direct Digital and Baosheng Media

Given the investment horizon of 90 days Direct Digital Holdings is expected to generate 1.82 times more return on investment than Baosheng Media. However, Direct Digital is 1.82 times more volatile than Baosheng Media Group. It trades about 0.02 of its potential returns per unit of risk. Baosheng Media Group is currently generating about -0.09 per unit of risk. If you would invest  115.00  in Direct Digital Holdings on February 3, 2025 and sell it today you would lose (29.00) from holding Direct Digital Holdings or give up 25.22% of portfolio value over 90 days.

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

Direct Digital Holdings  vs.  Baosheng Media Group

Direct Digital Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Direct Digital Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Direct Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Baosheng Media Group

Risk-Adjusted Performance

Very Weak

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 conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Direct Digital and Baosheng Media

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

The idea behind Direct Digital Holdings and Baosheng Media Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.