Correlation Between BYD Co and China Merchants
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By analyzing existing cross correlation between BYD Co Ltd and China Merchants Bank, you can compare the effects of market volatilities on BYD Co and China Merchants 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 China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and China Merchants.
Diversification Opportunities for BYD Co and China Merchants
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BYD and China is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank 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 China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of BYD Co i.e., BYD Co and China Merchants go up and down completely randomly.
Pair Corralation between BYD Co and China Merchants
Assuming the 90 days trading horizon BYD Co Ltd is expected to generate 1.29 times more return on investment than China Merchants. However, BYD Co is 1.29 times more volatile than China Merchants Bank. It trades about 0.01 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.0 per unit of risk. If you would invest 27,735 in BYD Co Ltd on October 15, 2024 and sell it today you would lose (1,133) from holding BYD Co Ltd or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co Ltd vs. China Merchants Bank
Performance |
| Timeline |
| BYD Co |
| China Merchants Bank |
BYD Co and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and China Merchants
The main advantage of trading using opposite BYD Co and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, China Merchants 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 China Merchants will offset losses from the drop in China Merchants' long position.| BYD Co vs. Allmed Medical Products | BYD Co vs. Guangdong Transtek Medical | BYD Co vs. Eyebright Medical Technology | BYD Co vs. Kontour Medical Technology |
| China Merchants vs. Ningxia Younglight Chemicals | China Merchants vs. Xiangtan Electrochemical Scientific | China Merchants vs. Shenyang Chemical Industry | China Merchants vs. Dosilicon Co |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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