Correlation Between BYD Company and MERCEDES-BENZ GRP
Can any of the company-specific risk be diversified away by investing in both BYD Company and MERCEDES-BENZ GRP 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 MERCEDES-BENZ GRP 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 MERCEDES BENZ GRP ADR14, you can compare the effects of market volatilities on BYD Company and MERCEDES-BENZ GRP 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 MERCEDES-BENZ GRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and MERCEDES-BENZ GRP.
Diversification Opportunities for BYD Company and MERCEDES-BENZ GRP
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BYD and MERCEDES-BENZ is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and MERCEDES BENZ GRP ADR14 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCEDES BENZ GRP 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 MERCEDES-BENZ GRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCEDES BENZ GRP has no effect on the direction of BYD Company i.e., BYD Company and MERCEDES-BENZ GRP go up and down completely randomly.
Pair Corralation between BYD Company and MERCEDES-BENZ GRP
Assuming the 90 days trading horizon BYD Company Limited is expected to generate 1.11 times more return on investment than MERCEDES-BENZ GRP. However, BYD Company is 1.11 times more volatile than MERCEDES BENZ GRP ADR14. It trades about -0.07 of its potential returns per unit of risk. MERCEDES BENZ GRP ADR14 is currently generating about -0.18 per unit of risk. If you would invest 6,600 in BYD Company Limited on September 1, 2024 and sell it today you would lose (250.00) from holding BYD Company Limited or give up 3.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BYD Company Limited vs. MERCEDES BENZ GRP ADR14
Performance |
| Timeline |
| BYD Limited |
| MERCEDES BENZ GRP |
BYD Company and MERCEDES-BENZ GRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and MERCEDES-BENZ GRP
The main advantage of trading using opposite BYD Company and MERCEDES-BENZ GRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, MERCEDES-BENZ GRP 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 MERCEDES-BENZ GRP will offset losses from the drop in MERCEDES-BENZ GRP's long position.The idea behind BYD Company Limited and MERCEDES BENZ GRP ADR14 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MERCEDES-BENZ GRP vs. Strategic Investments AS | MERCEDES-BENZ GRP vs. CapitaLand Investment Limited | MERCEDES-BENZ GRP vs. Gladstone Investment | MERCEDES-BENZ GRP vs. PennyMac Mortgage Investment |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |