Correlation Between United Internet and BYD
Can any of the company-specific risk be diversified away by investing in both United Internet and BYD 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 United Internet and BYD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and BYD Co, you can compare the effects of market volatilities on United Internet and BYD 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 United Internet with a short position of BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and BYD.
Diversification Opportunities for United Internet and BYD
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and BYD is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and United Internet 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 United Internet AG are associated (or correlated) with BYD. 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 United Internet i.e., United Internet and BYD go up and down completely randomly.
Pair Corralation between United Internet and BYD
Assuming the 90 days trading horizon United Internet is expected to generate 4.4 times less return on investment than BYD. But when comparing it to its historical volatility, United Internet AG is 5.7 times less risky than BYD. It trades about 0.11 of its potential returns per unit of risk. BYD Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,292 in BYD Co on September 13, 2024 and sell it today you would earn a total of 268.00 from holding BYD Co or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. BYD Co
Performance |
| Timeline |
| United Internet AG |
| BYD Co |
United Internet and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and BYD
The main advantage of trading using opposite United Internet and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, BYD 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 will offset losses from the drop in BYD's long position.| United Internet vs. Samsung Electronics Co | United Internet vs. Samsung Electronics Co | United Internet vs. Hyundai Motor | United Internet vs. Reliance Industries Ltd |
| BYD vs. Automatic Data Processing | BYD vs. Take Two Interactive Software | BYD vs. Auto Trader Group | BYD vs. Evolution Gaming Group |
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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