Correlation Between BYD Company and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both BYD Company and Samsung SDI 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 Samsung SDI 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 Samsung SDI Co, you can compare the effects of market volatilities on BYD Company and Samsung SDI 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 Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and Samsung SDI.
Diversification Opportunities for BYD Company and Samsung SDI
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BYD and Samsung is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and Samsung SDI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI 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 Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of BYD Company i.e., BYD Company and Samsung SDI go up and down completely randomly.
Pair Corralation between BYD Company and Samsung SDI
Assuming the 90 days horizon BYD Company Limited is expected to generate 0.83 times more return on investment than Samsung SDI. However, BYD Company Limited is 1.2 times less risky than Samsung SDI. It trades about 0.07 of its potential returns per unit of risk. Samsung SDI Co is currently generating about -0.06 per unit of risk. If you would invest 2,186 in BYD Company Limited on September 5, 2024 and sell it today you would earn a total of 1,026 from holding BYD Company Limited or generate 46.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
BYD Company Limited vs. Samsung SDI Co
Performance |
| Timeline |
| BYD Limited |
| Samsung SDI |
BYD Company and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and Samsung SDI
The main advantage of trading using opposite BYD Company and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, Samsung SDI 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 Samsung SDI will offset losses from the drop in Samsung SDI's long position.| BYD Company vs. Xiaomi | BYD Company vs. Geely Automobile Holdings | BYD Company vs. Nel ASA | BYD Company vs. JinkoSolar Holding Co |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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