Correlation Between BYD Co and Lendinvest PLC
Can any of the company-specific risk be diversified away by investing in both BYD Co and Lendinvest PLC 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 Lendinvest PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Lendinvest PLC, you can compare the effects of market volatilities on BYD Co and Lendinvest PLC 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 Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Lendinvest PLC.
Diversification Opportunities for BYD Co and Lendinvest PLC
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BYD and Lendinvest is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest 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 Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of BYD Co i.e., BYD Co and Lendinvest PLC go up and down completely randomly.
Pair Corralation between BYD Co and Lendinvest PLC
Assuming the 90 days trading horizon BYD Co is expected to generate 4.22 times more return on investment than Lendinvest PLC. However, BYD Co is 4.22 times more volatile than Lendinvest PLC. It trades about 0.03 of its potential returns per unit of risk. Lendinvest PLC is currently generating about 0.05 per unit of risk. If you would invest 3,558 in BYD Co on November 27, 2024 and sell it today you would earn a total of 2.00 from holding BYD Co or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co vs. Lendinvest PLC
Performance |
| Timeline |
| BYD Co |
| Lendinvest PLC |
BYD Co and Lendinvest PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and Lendinvest PLC
The main advantage of trading using opposite BYD Co and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, Lendinvest PLC 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 Lendinvest PLC will offset losses from the drop in Lendinvest PLC's long position.| BYD Co vs. Cairo Communication SpA | BYD Co vs. Team Internet Group | BYD Co vs. GlobalData PLC | BYD Co vs. Tyson Foods Cl |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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