Correlation Between BYD ELECTRONIC and Bayer Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both BYD ELECTRONIC and Bayer Aktiengesellscha 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 ELECTRONIC and Bayer Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD ELECTRONIC and Bayer Aktiengesellschaft, you can compare the effects of market volatilities on BYD ELECTRONIC and Bayer Aktiengesellscha 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 ELECTRONIC with a short position of Bayer Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD ELECTRONIC and Bayer Aktiengesellscha.
Diversification Opportunities for BYD ELECTRONIC and Bayer Aktiengesellscha
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BYD and Bayer is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BYD ELECTRONIC and Bayer Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer Aktiengesellschaft and BYD ELECTRONIC 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 ELECTRONIC are associated (or correlated) with Bayer Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer Aktiengesellschaft has no effect on the direction of BYD ELECTRONIC i.e., BYD ELECTRONIC and Bayer Aktiengesellscha go up and down completely randomly.
Pair Corralation between BYD ELECTRONIC and Bayer Aktiengesellscha
Assuming the 90 days trading horizon BYD ELECTRONIC is expected to generate 1.18 times more return on investment than Bayer Aktiengesellscha. However, BYD ELECTRONIC is 1.18 times more volatile than Bayer Aktiengesellschaft. It trades about 0.08 of its potential returns per unit of risk. Bayer Aktiengesellschaft is currently generating about -0.04 per unit of risk. If you would invest 225.00 in BYD ELECTRONIC on November 27, 2024 and sell it today you would earn a total of 475.00 from holding BYD ELECTRONIC or generate 211.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD ELECTRONIC vs. Bayer Aktiengesellschaft
Performance |
| Timeline |
| BYD ELECTRONIC |
| Bayer Aktiengesellschaft |
BYD ELECTRONIC and Bayer Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD ELECTRONIC and Bayer Aktiengesellscha
The main advantage of trading using opposite BYD ELECTRONIC and Bayer Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD ELECTRONIC position performs unexpectedly, Bayer Aktiengesellscha 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 Bayer Aktiengesellscha will offset losses from the drop in Bayer Aktiengesellscha's long position.| BYD ELECTRONIC vs. NORTHISLE PERGOLD INC | BYD ELECTRONIC vs. GREENX METALS LTD | BYD ELECTRONIC vs. Casio Computer CoLtd | BYD ELECTRONIC vs. CORNISH METALS INC |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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