Correlation Between BYD Company and Powercell Sweden
Can any of the company-specific risk be diversified away by investing in both BYD Company and Powercell Sweden 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 Company and Powercell Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Company Limited and Powercell Sweden, you can compare the effects of market volatilities on BYD Company and Powercell Sweden 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 Company with a short position of Powercell Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and Powercell Sweden.
Diversification Opportunities for BYD Company and Powercell Sweden
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BYD and Powercell is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and Powercell Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powercell Sweden and BYD Company 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 Company Limited are associated (or correlated) with Powercell Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powercell Sweden has no effect on the direction of BYD Company i.e., BYD Company and Powercell Sweden go up and down completely randomly.
Pair Corralation between BYD Company and Powercell Sweden
Assuming the 90 days horizon BYD Company Limited is expected to generate 0.36 times more return on investment than Powercell Sweden. However, BYD Company Limited is 2.78 times less risky than Powercell Sweden. It trades about -0.29 of its potential returns per unit of risk. Powercell Sweden is currently generating about -0.12 per unit of risk. If you would invest 3,541 in BYD Company Limited on August 29, 2024 and sell it today you would lose (366.00) from holding BYD Company Limited or give up 10.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
BYD Company Limited vs. Powercell Sweden
Performance |
| Timeline |
| BYD Limited |
| Powercell Sweden |
BYD Company and Powercell Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and Powercell Sweden
The main advantage of trading using opposite BYD Company and Powercell Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, Powercell Sweden 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 Powercell Sweden will offset losses from the drop in Powercell Sweden's long position.| BYD Company vs. Xiaomi | BYD Company vs. Geely Automobile Holdings | BYD Company vs. Nel ASA | BYD Company vs. JinkoSolar Holding Co |
| Powercell Sweden vs. Motorcar Parts of | Powercell Sweden vs. INDOFOOD AGRI RES | Powercell Sweden vs. HF FOODS GRP | Powercell Sweden vs. PT Indofood Sukses |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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