Correlation Between BYD Co and China Life
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By analyzing existing cross correlation between BYD Co Ltd and China Life Insurance, you can compare the effects of market volatilities on BYD Co and China Life 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 Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and China Life.
Diversification Opportunities for BYD Co and China Life
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BYD and China is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance 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 Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of BYD Co i.e., BYD Co and China Life go up and down completely randomly.
Pair Corralation between BYD Co and China Life
Assuming the 90 days trading horizon BYD Co Ltd is expected to under-perform the China Life. But the stock apears to be less risky and, when comparing its historical volatility, BYD Co Ltd is 1.52 times less risky than China Life. The stock trades about -0.19 of its potential returns per unit of risk. The China Life Insurance is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 4,519 in China Life Insurance on September 14, 2024 and sell it today you would lose (104.00) from holding China Life Insurance or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co Ltd vs. China Life Insurance
Performance |
| Timeline |
| BYD Co |
| China Life Insurance |
BYD Co and China Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and China Life
The main advantage of trading using opposite BYD Co and China Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, China Life 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 Life will offset losses from the drop in China Life's long position.| BYD Co vs. Yonyou Auto Information | BYD Co vs. Anhui Jianghuai Automobile | BYD Co vs. Digital China Information | BYD Co vs. Zhongtong Guomai Communication |
| China Life vs. BYD Co Ltd | China Life vs. China Mobile Limited | China Life vs. Agricultural Bank of | China Life 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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