Correlation Between Etsy and Baozun

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

By analyzing existing cross correlation between Etsy Inc and Baozun Inc, you can compare the effects of market volatilities on Etsy and Baozun 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 Etsy with a short position of Baozun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etsy and Baozun.

Diversification Opportunities for Etsy and Baozun

-0.42

Correlation Coefficient

Etsy  Baozun

Very good diversification

The 3 months correlation between Etsy and Baozun is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Baozun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baozun Inc and Etsy 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 Etsy Inc are associated (or correlated) with Baozun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baozun Inc has no effect on the direction of Etsy i.e., Etsy and Baozun go up and down completely randomly.

Pair Corralation between Etsy and Baozun

Given the investment horizon of 90 days Etsy Inc is expected to generate 0.85 times more return on investment than Baozun. However, Etsy Inc is 1.17 times less risky than Baozun. It trades about 0.12 of its potential returns per unit of risk. Baozun Inc is currently generating about -0.12 per unit of risk. If you would invest  4,786  in Etsy Inc on May 8, 2025 and sell it today you would earn a total of  945.00  from holding Etsy Inc or generate 19.75% return on investment over 90 days.

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

Etsy Inc  vs.  Baozun Inc

Etsy Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Etsy Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Etsy showed solid returns over the last few months and may actually be approaching a breakup point.

Baozun Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Baozun Inc 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 September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Etsy and Baozun

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

The idea behind Etsy Inc and Baozun Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.