Correlation Between BYD Company and JD HEALTH
Can any of the company-specific risk be diversified away by investing in both BYD Company and JD HEALTH 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 JD HEALTH 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 JD HEALTH INTL, you can compare the effects of market volatilities on BYD Company and JD HEALTH 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 JD HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and JD HEALTH.
Diversification Opportunities for BYD Company and JD HEALTH
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BYD and 8ZN is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and JD HEALTH INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD HEALTH INTL 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 JD HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD HEALTH INTL has no effect on the direction of BYD Company i.e., BYD Company and JD HEALTH go up and down completely randomly.
Pair Corralation between BYD Company and JD HEALTH
Assuming the 90 days trading horizon BYD Company Limited is expected to generate 0.86 times more return on investment than JD HEALTH. However, BYD Company Limited is 1.16 times less risky than JD HEALTH. It trades about 0.06 of its potential returns per unit of risk. JD HEALTH INTL is currently generating about -0.01 per unit of risk. If you would invest 5,142 in BYD Company Limited on November 28, 2024 and sell it today you would earn a total of 4,358 from holding BYD Company Limited or generate 84.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
BYD Company Limited vs. JD HEALTH INTL
Performance |
| Timeline |
| BYD Limited |
| JD HEALTH INTL |
BYD Company and JD HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and JD HEALTH
The main advantage of trading using opposite BYD Company and JD HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, JD HEALTH 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 JD HEALTH will offset losses from the drop in JD HEALTH's long position.| BYD Company vs. DELTA AIR LINES | BYD Company vs. OAKTRSPECLENDNEW | BYD Company vs. Commonwealth Bank of | BYD Company vs. BANK OCHINA H |
| JD HEALTH vs. Nanjing Panda Electronics | JD HEALTH vs. Nucletron Electronic Aktiengesellschaft | JD HEALTH vs. Siamgas And Petrochemicals | JD HEALTH vs. Arrow Electronics |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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