Correlation Between BYD Co and Guocheng Mining
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By analyzing existing cross correlation between BYD Co Ltd and Guocheng Mining Co, you can compare the effects of market volatilities on BYD Co and Guocheng Mining 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 BYD Co with a short position of Guocheng Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Guocheng Mining.
Diversification Opportunities for BYD Co and Guocheng Mining
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BYD and Guocheng is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and Guocheng Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guocheng Mining and BYD Co 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 BYD Co Ltd are associated (or correlated) with Guocheng Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guocheng Mining has no effect on the direction of BYD Co i.e., BYD Co and Guocheng Mining go up and down completely randomly.
Pair Corralation between BYD Co and Guocheng Mining
Assuming the 90 days trading horizon BYD Co Ltd is expected to under-perform the Guocheng Mining. But the stock apears to be less risky and, when comparing its historical volatility, BYD Co Ltd is 1.96 times less risky than Guocheng Mining. The stock trades about -0.18 of its potential returns per unit of risk. The Guocheng Mining Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,244 in Guocheng Mining Co on August 28, 2024 and sell it today you would earn a total of 151.00 from holding Guocheng Mining Co or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co Ltd vs. Guocheng Mining Co
Performance |
| Timeline |
| BYD Co |
| Guocheng Mining |
BYD Co and Guocheng Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and Guocheng Mining
The main advantage of trading using opposite BYD Co and Guocheng Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, Guocheng Mining 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 Guocheng Mining will offset losses from the drop in Guocheng Mining's long position.| BYD Co vs. Changchun Faway Automobile | BYD Co vs. Songz Automobile Air | BYD Co vs. Tongyu Communication | BYD Co vs. Hubei Yingtong Telecommunication |
| Guocheng Mining vs. Industrial and Commercial | Guocheng Mining vs. Agricultural Bank of | Guocheng Mining vs. China Construction Bank | Guocheng Mining vs. Bank of China |
Check out your portfolio center.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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