Correlation Between Ebro Foods and BYD
Can any of the company-specific risk be diversified away by investing in both Ebro Foods 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 Ebro Foods and BYD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and BYD Co, you can compare the effects of market volatilities on Ebro Foods 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 Ebro Foods with a short position of BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and BYD.
Diversification Opportunities for Ebro Foods and BYD
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ebro and BYD is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and BYD go up and down completely randomly.
Pair Corralation between Ebro Foods and BYD
Assuming the 90 days trading horizon Ebro Foods is expected to generate 52.79 times less return on investment than BYD. But when comparing it to its historical volatility, Ebro Foods is 21.95 times less risky than BYD. It trades about 0.02 of its potential returns per unit of risk. BYD Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,505 in BYD Co on November 7, 2024 and sell it today you would earn a total of 55.00 from holding BYD Co or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. BYD Co
Performance |
| Timeline |
| Ebro Foods |
| BYD Co |
Ebro Foods and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and BYD
The main advantage of trading using opposite Ebro Foods and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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.| Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Toyota Motor Corp | Ebro Foods vs. Reliance Industries Ltd |
| BYD vs. Jacquet Metal Service | BYD vs. GreenX Metals | BYD vs. European Metals Holdings | BYD vs. Grand Vision Media |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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