Correlation Between AcadeMedia and BYD
Can any of the company-specific risk be diversified away by investing in both AcadeMedia 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 AcadeMedia and BYD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AcadeMedia AB and BYD Co, you can compare the effects of market volatilities on AcadeMedia 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 AcadeMedia with a short position of BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and BYD.
Diversification Opportunities for AcadeMedia and BYD
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AcadeMedia and BYD is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and AcadeMedia 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 AcadeMedia 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 AcadeMedia i.e., AcadeMedia and BYD go up and down completely randomly.
Pair Corralation between AcadeMedia and BYD
Assuming the 90 days trading horizon AcadeMedia is expected to generate 20.36 times less return on investment than BYD. But when comparing it to its historical volatility, AcadeMedia AB is 3.17 times less risky than BYD. It trades about 0.02 of its potential returns per unit of risk. BYD Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,225 in BYD Co on October 17, 2024 and sell it today you would earn a total of 335.00 from holding BYD Co or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AcadeMedia AB vs. BYD Co
Performance |
| Timeline |
| AcadeMedia AB |
| BYD Co |
AcadeMedia and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AcadeMedia and BYD
The main advantage of trading using opposite AcadeMedia and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AcadeMedia 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.| AcadeMedia vs. Aptitude Software Group | AcadeMedia vs. Primorus Investments plc | AcadeMedia vs. SMA Solar Technology | AcadeMedia vs. Allianz Technology Trust |
| BYD vs. AcadeMedia AB | BYD vs. Fidelity National Information | BYD vs. Catalyst Media Group | BYD vs. Centaur 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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