Correlation Between BYD Co and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both BYD Co and Gamma Communications 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 Co and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Gamma Communications PLC, you can compare the effects of market volatilities on BYD Co and Gamma Communications 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 Co with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Gamma Communications.
Diversification Opportunities for BYD Co and Gamma Communications
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BYD and Gamma is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC and BYD Co 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of BYD Co i.e., BYD Co and Gamma Communications go up and down completely randomly.
Pair Corralation between BYD Co and Gamma Communications
Assuming the 90 days trading horizon BYD Co is expected to generate 6.67 times more return on investment than Gamma Communications. However, BYD Co is 6.67 times more volatile than Gamma Communications PLC. It trades about 0.08 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about 0.07 per unit of risk. If you would invest 3,340 in BYD Co on November 27, 2024 and sell it today you would earn a total of 220.00 from holding BYD Co or generate 6.59% 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. Gamma Communications PLC
Performance |
| Timeline |
| BYD Co |
| Gamma Communications PLC |
BYD Co and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and Gamma Communications
The main advantage of trading using opposite BYD Co and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| BYD Co vs. Great Western Mining | BYD Co vs. MyHealthChecked Plc | BYD Co vs. Induction Healthcare Group | BYD Co vs. Geely Automobile Holdings |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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