Correlation Between BYD and Centaur Media
Can any of the company-specific risk be diversified away by investing in both BYD and Centaur Media 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 Centaur Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Centaur Media, you can compare the effects of market volatilities on BYD and Centaur Media 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 Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and Centaur Media.
Diversification Opportunities for BYD and Centaur Media
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BYD and Centaur is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of BYD i.e., BYD and Centaur Media go up and down completely randomly.
Pair Corralation between BYD and Centaur Media
Assuming the 90 days trading horizon BYD Co is expected to generate 3.71 times more return on investment than Centaur Media. However, BYD is 3.71 times more volatile than Centaur Media. It trades about 0.03 of its potential returns per unit of risk. Centaur Media is currently generating about -0.12 per unit of risk. If you would invest 3,560 in BYD Co on September 1, 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 | 95.65% |
| Values | Daily Returns |
BYD Co vs. Centaur Media
Performance |
| Timeline |
| BYD Co |
| Centaur Media |
BYD and Centaur Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and Centaur Media
The main advantage of trading using opposite BYD and Centaur Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, Centaur Media 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 Centaur Media will offset losses from the drop in Centaur Media's long position.The idea behind BYD Co and Centaur Media 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.| Centaur Media vs. X FAB Silicon Foundries | Centaur Media vs. Coor Service Management | Centaur Media vs. Hochschild Mining plc | Centaur Media vs. Universal Music Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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