Correlation Between BYD and Marks
Can any of the company-specific risk be diversified away by investing in both BYD and Marks 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 Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Marks and Spencer, you can compare the effects of market volatilities on BYD and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and Marks.
Diversification Opportunities for BYD and Marks
Significant diversification
The 3 months correlation between BYD and Marks is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of BYD i.e., BYD and Marks go up and down completely randomly.
Pair Corralation between BYD and Marks
Assuming the 90 days trading horizon BYD Co is expected to generate 9.47 times more return on investment than Marks. However, BYD is 9.47 times more volatile than Marks and Spencer. It trades about 0.05 of its potential returns per unit of risk. Marks and Spencer is currently generating about 0.1 per unit of risk. If you would invest 3,505 in BYD Co on October 14, 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 | 100.0% |
| Values | Daily Returns |
BYD Co vs. Marks and Spencer
Performance |
| Timeline |
| BYD Co |
| Marks and Spencer |
BYD and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and Marks
The main advantage of trading using opposite BYD and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| BYD vs. Celebrus Technologies plc | BYD vs. Synchrony Financial | BYD vs. Eneraqua Technologies PLC | BYD vs. Bankers Investment Trust |
| Marks vs. Atresmedia | Marks vs. Cairo Communication SpA | Marks vs. Zinc Media Group | Marks vs. Gaming Realms plc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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