Correlation Between BYD and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both BYD and XLMedia 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 and XLMedia 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 XLMedia PLC, you can compare the effects of market volatilities on BYD and XLMedia 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 with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and XLMedia PLC.
Diversification Opportunities for BYD and XLMedia PLC
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between BYD and XLMedia is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of BYD i.e., BYD and XLMedia PLC go up and down completely randomly.
Pair Corralation between BYD and XLMedia PLC
Assuming the 90 days trading horizon BYD Co is expected to generate 4.21 times more return on investment than XLMedia PLC. However, BYD is 4.21 times more volatile than XLMedia PLC. It trades about 0.03 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.01 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 Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BYD Co vs. XLMedia PLC
Performance |
| Timeline |
| BYD Co |
| XLMedia PLC |
BYD and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and XLMedia PLC
The main advantage of trading using opposite BYD and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, XLMedia 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.The idea behind BYD Co and XLMedia PLC 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.| XLMedia PLC vs. Uniper SE | XLMedia PLC vs. Mulberry Group PLC | XLMedia PLC vs. London Security Plc | XLMedia PLC vs. Triad Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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