Correlation Between AYRO and BAIC MotorLimited
Can any of the company-specific risk be diversified away by investing in both AYRO and BAIC MotorLimited 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 AYRO and BAIC MotorLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AYRO Inc and BAIC Motor, you can compare the effects of market volatilities on AYRO and BAIC MotorLimited 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 AYRO with a short position of BAIC MotorLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of AYRO and BAIC MotorLimited.
Diversification Opportunities for AYRO and BAIC MotorLimited
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AYRO and BAIC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding AYRO Inc and BAIC Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIC MotorLimited and AYRO 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 AYRO Inc are associated (or correlated) with BAIC MotorLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIC MotorLimited has no effect on the direction of AYRO i.e., AYRO and BAIC MotorLimited go up and down completely randomly.
Pair Corralation between AYRO and BAIC MotorLimited
Given the investment horizon of 90 days AYRO Inc is expected to under-perform the BAIC MotorLimited. But the stock apears to be less risky and, when comparing its historical volatility, AYRO Inc is 1.27 times less risky than BAIC MotorLimited. The stock trades about -0.1 of its potential returns per unit of risk. The BAIC Motor is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 27.00 in BAIC Motor on August 28, 2024 and sell it today you would earn a total of 3.00 from holding BAIC Motor or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AYRO Inc vs. BAIC Motor
Performance |
| Timeline |
| AYRO Inc |
| BAIC MotorLimited |
AYRO and BAIC MotorLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AYRO and BAIC MotorLimited
The main advantage of trading using opposite AYRO and BAIC MotorLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AYRO position performs unexpectedly, BAIC MotorLimited 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 BAIC MotorLimited will offset losses from the drop in BAIC MotorLimited's long position.The idea behind AYRO Inc and BAIC Motor 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.| BAIC MotorLimited vs. Isuzu Motors | BAIC MotorLimited vs. Renault SA | BAIC MotorLimited vs. Toyota Motor Corp | BAIC MotorLimited vs. Porsche Automobile Holding |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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