Correlation Between Tandy Leather and Boqii Holding

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Can any of the company-specific risk be diversified away by investing in both Tandy Leather and Boqii Holding 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 Tandy Leather and Boqii Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tandy Leather Factory and Boqii Holding Limited, you can compare the effects of market volatilities on Tandy Leather and Boqii Holding 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 Tandy Leather with a short position of Boqii Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tandy Leather and Boqii Holding.

Diversification Opportunities for Tandy Leather and Boqii Holding

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Tandy and Boqii is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory and Boqii Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boqii Holding Limited and Tandy Leather 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 Tandy Leather Factory are associated (or correlated) with Boqii Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boqii Holding Limited has no effect on the direction of Tandy Leather i.e., Tandy Leather and Boqii Holding go up and down completely randomly.

Pair Corralation between Tandy Leather and Boqii Holding

Considering the 90-day investment horizon Tandy Leather is expected to generate 3.63 times less return on investment than Boqii Holding. But when comparing it to its historical volatility, Tandy Leather Factory is 5.4 times less risky than Boqii Holding. It trades about 0.12 of its potential returns per unit of risk. Boqii Holding Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Boqii Holding Limited on April 24, 2025 and sell it today you would earn a total of  61.00  from holding Boqii Holding Limited or generate 27.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Tandy Leather Factory  vs.  Boqii Holding Limited

 Performance 
       Timeline  
Tandy Leather Factory 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Tandy Leather Factory are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Tandy Leather reported solid returns over the last few months and may actually be approaching a breakup point.
Boqii Holding Limited 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Boqii Holding Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Boqii Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Tandy Leather and Boqii Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tandy Leather and Boqii Holding

The main advantage of trading using opposite Tandy Leather and Boqii Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandy Leather position performs unexpectedly, Boqii Holding 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 Boqii Holding will offset losses from the drop in Boqii Holding's long position.
The idea behind Tandy Leather Factory and Boqii Holding Limited 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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