Correlation Between Changjiang Publishing and BYD Co
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By analyzing existing cross correlation between Changjiang Publishing Media and BYD Co Ltd, you can compare the effects of market volatilities on Changjiang Publishing and BYD Co 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 Changjiang Publishing with a short position of BYD Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changjiang Publishing and BYD Co.
Diversification Opportunities for Changjiang Publishing and BYD Co
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Changjiang and BYD is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Changjiang Publishing Media and BYD Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Changjiang Publishing 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 Changjiang Publishing Media are associated (or correlated) with BYD Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of Changjiang Publishing i.e., Changjiang Publishing and BYD Co go up and down completely randomly.
Pair Corralation between Changjiang Publishing and BYD Co
Assuming the 90 days trading horizon Changjiang Publishing is expected to generate 1.47 times less return on investment than BYD Co. In addition to that, Changjiang Publishing is 1.06 times more volatile than BYD Co Ltd. It trades about 0.03 of its total potential returns per unit of risk. BYD Co Ltd is currently generating about 0.04 per unit of volatility. If you would invest 23,156 in BYD Co Ltd on September 12, 2024 and sell it today you would earn a total of 5,099 from holding BYD Co Ltd or generate 22.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changjiang Publishing Media vs. BYD Co Ltd
Performance |
| Timeline |
| Changjiang Publishing |
| BYD Co |
Changjiang Publishing and BYD Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changjiang Publishing and BYD Co
The main advantage of trading using opposite Changjiang Publishing and BYD Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changjiang Publishing position performs unexpectedly, BYD Co 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 Co will offset losses from the drop in BYD Co's long position.The idea behind Changjiang Publishing Media and BYD Co Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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