Correlation Between BYD and Ball Corp
Can any of the company-specific risk be diversified away by investing in both BYD and Ball Corp 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 BYD and Ball Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Ball Corp, you can compare the effects of market volatilities on BYD and Ball Corp 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 BYD with a short position of Ball Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and Ball Corp.
Diversification Opportunities for BYD and Ball Corp
Significant diversification
The 3 months correlation between BYD and Ball is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Ball Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ball Corp and BYD 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 BYD Co are associated (or correlated) with Ball Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ball Corp has no effect on the direction of BYD i.e., BYD and Ball Corp go up and down completely randomly.
Pair Corralation between BYD and Ball Corp
Assuming the 90 days trading horizon BYD Co is expected to generate 4.06 times more return on investment than Ball Corp. However, BYD is 4.06 times more volatile than Ball Corp. It trades about 0.03 of its potential returns per unit of risk. Ball Corp is currently generating about -0.07 per unit of risk. If you would invest 3,560 in BYD Co on October 25, 2024 and sell it today you would earn a total of 0.00 from holding BYD Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
BYD Co vs. Ball Corp
Performance |
| Timeline |
| BYD Co |
| Ball Corp |
BYD and Ball Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and Ball Corp
The main advantage of trading using opposite BYD and Ball Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, Ball Corp 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 Ball Corp will offset losses from the drop in Ball Corp's long position.| BYD vs. LBG Media PLC | BYD vs. Synthomer plc | BYD vs. G5 Entertainment AB | BYD vs. Ecclesiastical Insurance Office |
| Ball Corp vs. Fevertree Drinks Plc | Ball Corp vs. Ubisoft Entertainment | Ball Corp vs. Catalyst Media Group | Ball Corp vs. One Media iP |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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