Correlation Between BYD Co and Guangzhou Zhujiang
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By analyzing existing cross correlation between BYD Co Ltd and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on BYD Co and Guangzhou Zhujiang 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 Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Guangzhou Zhujiang.
Diversification Opportunities for BYD Co and Guangzhou Zhujiang
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BYD and Guangzhou is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang 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 Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of BYD Co i.e., BYD Co and Guangzhou Zhujiang go up and down completely randomly.
Pair Corralation between BYD Co and Guangzhou Zhujiang
Assuming the 90 days trading horizon BYD Co is expected to generate 1.97 times less return on investment than Guangzhou Zhujiang. But when comparing it to its historical volatility, BYD Co Ltd is 1.16 times less risky than Guangzhou Zhujiang. It trades about 0.14 of its potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 908.00 in Guangzhou Zhujiang Brewery on September 29, 2024 and sell it today you would earn a total of 79.00 from holding Guangzhou Zhujiang Brewery or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co Ltd vs. Guangzhou Zhujiang Brewery
Performance |
| Timeline |
| BYD Co |
| Guangzhou Zhujiang |
BYD Co and Guangzhou Zhujiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and Guangzhou Zhujiang
The main advantage of trading using opposite BYD Co and Guangzhou Zhujiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, Guangzhou Zhujiang 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 Guangzhou Zhujiang will offset losses from the drop in Guangzhou Zhujiang's long position.The idea behind BYD Co Ltd and Guangzhou Zhujiang Brewery 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.| Guangzhou Zhujiang vs. BYD Co Ltd | Guangzhou Zhujiang vs. China Mobile Limited | Guangzhou Zhujiang vs. Agricultural Bank of | Guangzhou Zhujiang vs. Industrial and Commercial |
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 Stocks Directory module to find actively traded stocks across global markets.
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