Correlation Between BYD Company and Nel ASA
Can any of the company-specific risk be diversified away by investing in both BYD Company and Nel ASA 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 Nel ASA 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 Nel ASA, you can compare the effects of market volatilities on BYD Company and Nel ASA 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and Nel ASA.
Diversification Opportunities for BYD Company and Nel ASA
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYD and Nel is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of BYD Company i.e., BYD Company and Nel ASA go up and down completely randomly.
Pair Corralation between BYD Company and Nel ASA
Assuming the 90 days horizon BYD Company Limited is expected to generate 0.38 times more return on investment than Nel ASA. However, BYD Company Limited is 2.65 times less risky than Nel ASA. It trades about -0.29 of its potential returns per unit of risk. Nel ASA is currently generating about -0.34 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 Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BYD Company Limited vs. Nel ASA
Performance |
| Timeline |
| BYD Limited |
| Nel ASA |
BYD Company and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and Nel ASA
The main advantage of trading using opposite BYD Company and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| BYD Company vs. Xiaomi | BYD Company vs. Geely Automobile Holdings | BYD Company vs. Nel ASA | BYD Company vs. JinkoSolar Holding Co |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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