Correlation Between BYD Company and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both BYD Company and SoftBank Group 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 SoftBank Group 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 SoftBank Group Corp, you can compare the effects of market volatilities on BYD Company and SoftBank Group 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 SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and SoftBank Group.
Diversification Opportunities for BYD Company and SoftBank Group
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BYD and SoftBank is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp 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 SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of BYD Company i.e., BYD Company and SoftBank Group go up and down completely randomly.
Pair Corralation between BYD Company and SoftBank Group
Assuming the 90 days horizon BYD Company is expected to generate 22.67 times less return on investment than SoftBank Group. In addition to that, BYD Company is 1.3 times more volatile than SoftBank Group Corp. It trades about 0.0 of its total potential returns per unit of risk. SoftBank Group Corp is currently generating about 0.06 per unit of volatility. If you would invest 5,277 in SoftBank Group Corp on August 30, 2024 and sell it today you would earn a total of 283.00 from holding SoftBank Group Corp or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
BYD Company Limited vs. SoftBank Group Corp
Performance |
| Timeline |
| BYD Limited |
| SoftBank Group Corp |
BYD Company and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and SoftBank Group
The main advantage of trading using opposite BYD Company and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| BYD Company vs. Tesla Inc | BYD Company vs. Toyota Motor | BYD Company vs. Toyota Motor | BYD Company vs. MERCEDES BENZ GRP ADR14 |
| SoftBank Group vs. Tencent Holdings | SoftBank Group vs. BYD Company Limited | SoftBank Group vs. Geely Automobile Holdings | SoftBank Group vs. Baidu Inc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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