Correlation Between VARIOUS EATERIES and BYD ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both VARIOUS EATERIES and BYD ELECTRONIC 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 VARIOUS EATERIES and BYD ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VARIOUS EATERIES LS and BYD ELECTRONIC, you can compare the effects of market volatilities on VARIOUS EATERIES and BYD ELECTRONIC 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 VARIOUS EATERIES with a short position of BYD ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and BYD ELECTRONIC.
Diversification Opportunities for VARIOUS EATERIES and BYD ELECTRONIC
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VARIOUS and BYD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and BYD ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD ELECTRONIC and VARIOUS EATERIES 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 VARIOUS EATERIES LS are associated (or correlated) with BYD ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD ELECTRONIC has no effect on the direction of VARIOUS EATERIES i.e., VARIOUS EATERIES and BYD ELECTRONIC go up and down completely randomly.
Pair Corralation between VARIOUS EATERIES and BYD ELECTRONIC
Assuming the 90 days horizon VARIOUS EATERIES is expected to generate 20.9 times less return on investment than BYD ELECTRONIC. But when comparing it to its historical volatility, VARIOUS EATERIES LS is 3.42 times less risky than BYD ELECTRONIC. It trades about 0.01 of its potential returns per unit of risk. BYD ELECTRONIC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 403.00 in BYD ELECTRONIC on August 29, 2024 and sell it today you would earn a total of 9.00 from holding BYD ELECTRONIC or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VARIOUS EATERIES LS vs. BYD ELECTRONIC
Performance |
| Timeline |
| VARIOUS EATERIES |
| BYD ELECTRONIC |
VARIOUS EATERIES and BYD ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VARIOUS EATERIES and BYD ELECTRONIC
The main advantage of trading using opposite VARIOUS EATERIES and BYD ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES position performs unexpectedly, BYD ELECTRONIC 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 ELECTRONIC will offset losses from the drop in BYD ELECTRONIC's long position.| VARIOUS EATERIES vs. STRAYER EDUCATION | VARIOUS EATERIES vs. GAMING FAC SA | VARIOUS EATERIES vs. GigaMedia | VARIOUS EATERIES vs. TAL Education Group |
| BYD ELECTRONIC vs. Seven West Media | BYD ELECTRONIC vs. Playtech plc | BYD ELECTRONIC vs. PLAY2CHILL SA ZY | BYD ELECTRONIC vs. Flutter Entertainment PLC |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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