Correlation Between BYD ELECTRONIC and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both BYD ELECTRONIC and Eastman Chemical 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 Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD ELECTRONIC and Eastman Chemical, you can compare the effects of market volatilities on BYD ELECTRONIC and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD ELECTRONIC and Eastman Chemical.
Diversification Opportunities for BYD ELECTRONIC and Eastman Chemical
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BYD and Eastman is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BYD ELECTRONIC and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of BYD ELECTRONIC i.e., BYD ELECTRONIC and Eastman Chemical go up and down completely randomly.
Pair Corralation between BYD ELECTRONIC and Eastman Chemical
Assuming the 90 days trading horizon BYD ELECTRONIC is expected to generate 3.18 times more return on investment than Eastman Chemical. However, BYD ELECTRONIC is 3.18 times more volatile than Eastman Chemical. It trades about 0.06 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.08 per unit of risk. If you would invest 316.00 in BYD ELECTRONIC on September 4, 2024 and sell it today you would earn a total of 145.00 from holding BYD ELECTRONIC or generate 45.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
BYD ELECTRONIC vs. Eastman Chemical
Performance |
| Timeline |
| BYD ELECTRONIC |
| Eastman Chemical |
BYD ELECTRONIC and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD ELECTRONIC and Eastman Chemical
The main advantage of trading using opposite BYD ELECTRONIC and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD ELECTRONIC position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| BYD ELECTRONIC vs. TOTAL GABON | BYD ELECTRONIC vs. Walgreens Boots Alliance | BYD ELECTRONIC vs. Peak Resources Limited |
| Eastman Chemical vs. AIR LIQUIDE ADR | Eastman Chemical vs. BASF SE | Eastman Chemical vs. BASF SE | Eastman Chemical vs. BASF SE |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |