Correlation Between Allmed Medical and BYD Co

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

Diversification Opportunities for Allmed Medical and BYD Co

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Allmed and BYD is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Allmed Medical Products and BYD Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Allmed Medical 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 Allmed Medical Products are associated (or correlated) with BYD Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of Allmed Medical i.e., Allmed Medical and BYD Co go up and down completely randomly.

Pair Corralation between Allmed Medical and BYD Co

Assuming the 90 days trading horizon Allmed Medical Products is expected to generate 1.7 times more return on investment than BYD Co. However, Allmed Medical is 1.7 times more volatile than BYD Co Ltd. It trades about 0.15 of its potential returns per unit of risk. BYD Co Ltd is currently generating about -0.17 per unit of risk. If you would invest  872.00  in Allmed Medical Products on August 28, 2024 and sell it today you would earn a total of  85.00  from holding Allmed Medical Products or generate 9.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Allmed Medical Products  vs.  BYD Co Ltd

 Performance 
       Timeline  
Allmed Medical Products 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Allmed Medical Products are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Allmed Medical sustained solid returns over the last few months and may actually be approaching a breakup point.
BYD Co 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BYD Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Allmed Medical and BYD Co Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Allmed Medical and BYD Co

The main advantage of trading using opposite Allmed Medical and BYD Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allmed Medical position performs unexpectedly, BYD Co 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 BYD Co will offset losses from the drop in BYD Co's long position.
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The idea behind Allmed Medical Products and BYD Co Ltd 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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