Correlation Between Powercell Sweden and BYD Company
Can any of the company-specific risk be diversified away by investing in both Powercell Sweden and BYD Company 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 Powercell Sweden and BYD Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powercell Sweden and BYD Company Limited, you can compare the effects of market volatilities on Powercell Sweden and BYD Company 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 Powercell Sweden with a short position of BYD Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powercell Sweden and BYD Company.
Diversification Opportunities for Powercell Sweden and BYD Company
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Powercell and BYD is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Powercell Sweden and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited and Powercell Sweden 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 Powercell Sweden are associated (or correlated) with BYD Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Limited has no effect on the direction of Powercell Sweden i.e., Powercell Sweden and BYD Company go up and down completely randomly.
Pair Corralation between Powercell Sweden and BYD Company
Assuming the 90 days horizon Powercell Sweden is expected to under-perform the BYD Company. In addition to that, Powercell Sweden is 2.78 times more volatile than BYD Company Limited. It trades about -0.12 of its total potential returns per unit of risk. BYD Company Limited is currently generating about -0.29 per unit of volatility. If you would invest 3,541 in BYD Company Limited on August 29, 2024 and sell it today you would lose (366.00) from holding BYD Company Limited or give up 10.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Powercell Sweden vs. BYD Company Limited
Performance |
| Timeline |
| Powercell Sweden |
| BYD Limited |
Powercell Sweden and BYD Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powercell Sweden and BYD Company
The main advantage of trading using opposite Powercell Sweden and BYD Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powercell Sweden position performs unexpectedly, BYD Company 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 BYD Company will offset losses from the drop in BYD Company's long position.| Powercell Sweden vs. Motorcar Parts of | Powercell Sweden vs. INDOFOOD AGRI RES | Powercell Sweden vs. HF FOODS GRP | Powercell Sweden vs. PT Indofood Sukses |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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