Correlation Between Kinnevik Investment and BYD
Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment 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 Kinnevik Investment and BYD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinnevik Investment AB and BYD Co, you can compare the effects of market volatilities on Kinnevik Investment 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 Kinnevik Investment with a short position of BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and BYD.
Diversification Opportunities for Kinnevik Investment and BYD
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kinnevik and BYD is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Kinnevik Investment 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 Kinnevik Investment AB 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 Kinnevik Investment i.e., Kinnevik Investment and BYD go up and down completely randomly.
Pair Corralation between Kinnevik Investment and BYD
Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the BYD. But the stock apears to be less risky and, when comparing its historical volatility, Kinnevik Investment AB is 7.46 times less risky than BYD. The stock trades about -0.05 of its potential returns per unit of risk. The 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 October 11, 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 | 98.81% |
| Values | Daily Returns |
Kinnevik Investment AB vs. BYD Co
Performance |
| Timeline |
| Kinnevik Investment |
| BYD Co |
Kinnevik Investment and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinnevik Investment and BYD
The main advantage of trading using opposite Kinnevik Investment and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment 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.| Kinnevik Investment vs. Walmart | Kinnevik Investment vs. BYD Co | Kinnevik Investment vs. Volkswagen AG | Kinnevik Investment vs. Volkswagen AG Non Vtg |
| BYD vs. Panther Metals PLC | BYD vs. First Class Metals | BYD vs. CNH Industrial NV | BYD vs. Kinnevik Investment AB |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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