Correlation Between BYD and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both BYD and Cairo Communication 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 Cairo Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Cairo Communication SpA, you can compare the effects of market volatilities on BYD and Cairo Communication 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 Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and Cairo Communication.
Diversification Opportunities for BYD and Cairo Communication
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between BYD and Cairo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA 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 Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of BYD i.e., BYD and Cairo Communication go up and down completely randomly.
Pair Corralation between BYD and Cairo Communication
Assuming the 90 days trading horizon BYD Co is expected to generate 9.23 times more return on investment than Cairo Communication. However, BYD is 9.23 times more volatile than Cairo Communication SpA. It trades about 0.05 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.08 per unit of risk. If you would invest 3,505 in BYD Co on October 12, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co vs. Cairo Communication SpA
Performance |
| Timeline |
| BYD Co |
| Cairo Communication SpA |
BYD and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and Cairo Communication
The main advantage of trading using opposite BYD and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.The idea behind BYD Co and Cairo Communication SpA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cairo Communication vs. Walmart | Cairo Communication vs. BYD Co | Cairo Communication vs. Volkswagen AG | Cairo Communication vs. Volkswagen AG Non Vtg |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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