Correlation Between BYD Co and Neometals
Can any of the company-specific risk be diversified away by investing in both BYD Co and Neometals 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 Neometals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Neometals, you can compare the effects of market volatilities on BYD Co and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Neometals.
Diversification Opportunities for BYD Co and Neometals
Very good diversification
The 3 months correlation between BYD and Neometals is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of BYD Co i.e., BYD Co and Neometals go up and down completely randomly.
Pair Corralation between BYD Co and Neometals
Assuming the 90 days trading horizon BYD Co is expected to generate 2.16 times more return on investment than Neometals. However, BYD Co is 2.16 times more volatile than Neometals. It trades about 0.07 of its potential returns per unit of risk. Neometals is currently generating about -0.03 per unit of risk. If you would invest 2,683 in BYD Co on November 28, 2024 and sell it today you would earn a total of 877.00 from holding BYD Co or generate 32.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.49% |
| Values | Daily Returns |
BYD Co vs. Neometals
Performance |
| Timeline |
| BYD Co |
| Neometals |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
BYD Co and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and Neometals
The main advantage of trading using opposite BYD Co and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' 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 |
| Neometals vs. Spirent Communications plc | Neometals vs. Litigation Capital Management | Neometals vs. Science in Sport | Neometals vs. Cairo Communication SpA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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