Correlation Between BYD and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both BYD and Alfa Financial 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 Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Alfa Financial Software, you can compare the effects of market volatilities on BYD and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and Alfa Financial.
Diversification Opportunities for BYD and Alfa Financial
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between BYD and Alfa is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of BYD i.e., BYD and Alfa Financial go up and down completely randomly.
Pair Corralation between BYD and Alfa Financial
Assuming the 90 days trading horizon BYD Co is expected to generate 6.48 times more return on investment than Alfa Financial. However, BYD is 6.48 times more volatile than Alfa Financial Software. It trades about 0.03 of its potential returns per unit of risk. Alfa Financial Software is currently generating about -0.4 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co vs. Alfa Financial Software
Performance |
| Timeline |
| BYD Co |
| Alfa Financial Software |
BYD and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and Alfa Financial
The main advantage of trading using opposite BYD and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| BYD vs. LBG Media PLC | BYD vs. Synthomer plc | BYD vs. G5 Entertainment AB | BYD vs. Ecclesiastical Insurance Office |
| Alfa Financial vs. BYD Co | Alfa Financial vs. Volkswagen AG | Alfa Financial vs. Volkswagen AG Non Vtg | Alfa Financial vs. Deutsche Post AG |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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