Correlation Between BYD ELECTRONIC and Coca-Cola FEMSA
Can any of the company-specific risk be diversified away by investing in both BYD ELECTRONIC and Coca-Cola FEMSA 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 Coca-Cola FEMSA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD ELECTRONIC and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on BYD ELECTRONIC and Coca-Cola FEMSA 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 Coca-Cola FEMSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD ELECTRONIC and Coca-Cola FEMSA.
Diversification Opportunities for BYD ELECTRONIC and Coca-Cola FEMSA
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between BYD and Coca-Cola is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BYD ELECTRONIC and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA 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 Coca-Cola FEMSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola FEMSA has no effect on the direction of BYD ELECTRONIC i.e., BYD ELECTRONIC and Coca-Cola FEMSA go up and down completely randomly.
Pair Corralation between BYD ELECTRONIC and Coca-Cola FEMSA
Assuming the 90 days trading horizon BYD ELECTRONIC is expected to generate 2.74 times more return on investment than Coca-Cola FEMSA. However, BYD ELECTRONIC is 2.74 times more volatile than Coca Cola FEMSA SAB. It trades about 0.07 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about -0.06 per unit of risk. If you would invest 289.00 in BYD ELECTRONIC on September 3, 2024 and sell it today you would earn a total of 125.00 from holding BYD ELECTRONIC or generate 43.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD ELECTRONIC vs. Coca Cola FEMSA SAB
Performance |
| Timeline |
| BYD ELECTRONIC |
| Coca Cola FEMSA |
BYD ELECTRONIC and Coca-Cola FEMSA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD ELECTRONIC and Coca-Cola FEMSA
The main advantage of trading using opposite BYD ELECTRONIC and Coca-Cola FEMSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD ELECTRONIC position performs unexpectedly, Coca-Cola FEMSA 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 Coca-Cola FEMSA will offset losses from the drop in Coca-Cola FEMSA's long position.| BYD ELECTRONIC vs. RETAIL FOOD GROUP | BYD ELECTRONIC vs. MOLSON RS BEVERAGE | BYD ELECTRONIC vs. GEELY AUTOMOBILE | BYD ELECTRONIC vs. National Retail Properties |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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