Correlation Between BYD ELECTRONIC and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both BYD ELECTRONIC and Geely Automobile 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 Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD ELECTRONIC and Geely Automobile Holdings, you can compare the effects of market volatilities on BYD ELECTRONIC and Geely Automobile 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 Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD ELECTRONIC and Geely Automobile.
Diversification Opportunities for BYD ELECTRONIC and Geely Automobile
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BYD and Geely is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BYD ELECTRONIC and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings 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 Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of BYD ELECTRONIC i.e., BYD ELECTRONIC and Geely Automobile go up and down completely randomly.
Pair Corralation between BYD ELECTRONIC and Geely Automobile
Assuming the 90 days trading horizon BYD ELECTRONIC is expected to generate 1.98 times less return on investment than Geely Automobile. In addition to that, BYD ELECTRONIC is 1.47 times more volatile than Geely Automobile Holdings. It trades about 0.03 of its total potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.09 per unit of volatility. If you would invest 93.00 in Geely Automobile Holdings on September 1, 2024 and sell it today you would earn a total of 76.00 from holding Geely Automobile Holdings or generate 81.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD ELECTRONIC vs. Geely Automobile Holdings
Performance |
| Timeline |
| BYD ELECTRONIC |
| Geely Automobile Holdings |
BYD ELECTRONIC and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD ELECTRONIC and Geely Automobile
The main advantage of trading using opposite BYD ELECTRONIC and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD ELECTRONIC position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.| BYD ELECTRONIC vs. Texas Roadhouse | BYD ELECTRONIC vs. FUYO GENERAL LEASE | BYD ELECTRONIC vs. KAUFMAN ET BROAD | BYD ELECTRONIC vs. QUEEN S ROAD |
| Geely Automobile vs. MAVEN WIRELESS SWEDEN | Geely Automobile vs. SWISS WATER DECAFFCOFFEE | Geely Automobile vs. BJs Restaurants | Geely Automobile vs. HomeToGo 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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