Correlation Between BYD and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both BYD and Kinnevik Investment 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 Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Kinnevik Investment AB, you can compare the effects of market volatilities on BYD and Kinnevik Investment 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 Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and Kinnevik Investment.
Diversification Opportunities for BYD and Kinnevik Investment
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BYD and Kinnevik is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment 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 Kinnevik Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnevik Investment has no effect on the direction of BYD i.e., BYD and Kinnevik Investment go up and down completely randomly.
Pair Corralation between BYD and Kinnevik Investment
Assuming the 90 days trading horizon BYD Co is expected to generate 7.46 times more return on investment than Kinnevik Investment. However, BYD is 7.46 times more volatile than Kinnevik Investment AB. It trades about 0.05 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.05 per unit of risk. 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 |
BYD Co vs. Kinnevik Investment AB
Performance |
| Timeline |
| BYD Co |
| Kinnevik Investment |
BYD and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and Kinnevik Investment
The main advantage of trading using opposite BYD and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, Kinnevik Investment 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 Kinnevik Investment will offset losses from the drop in Kinnevik Investment's long position.| BYD vs. Charter Communications Cl | BYD vs. Batm Advanced Communications | BYD vs. Zoom Video Communications | BYD vs. Impax Asset Management |
| Kinnevik Investment vs. alstria office REIT AG | Kinnevik Investment vs. Polar Capital Technology | Kinnevik Investment vs. Bloomsbury Publishing Plc | Kinnevik Investment vs. DXC Technology Co |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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