Correlation Between BYD Company and Deutsche Post
Can any of the company-specific risk be diversified away by investing in both BYD Company and Deutsche Post 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 Deutsche Post 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 Deutsche Post AG, you can compare the effects of market volatilities on BYD Company and Deutsche Post 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 Deutsche Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and Deutsche Post.
Diversification Opportunities for BYD Company and Deutsche Post
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BYD and Deutsche is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG 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 Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of BYD Company i.e., BYD Company and Deutsche Post go up and down completely randomly.
Pair Corralation between BYD Company and Deutsche Post
Assuming the 90 days trading horizon BYD Company Limited is expected to generate 1.06 times more return on investment than Deutsche Post. However, BYD Company is 1.06 times more volatile than Deutsche Post AG. It trades about -0.07 of its potential returns per unit of risk. Deutsche Post AG is currently generating about -0.14 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. Deutsche Post AG
Performance |
| Timeline |
| BYD Limited |
| Deutsche Post AG |
BYD Company and Deutsche Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and Deutsche Post
The main advantage of trading using opposite BYD Company and Deutsche Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, Deutsche Post 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 Deutsche Post will offset losses from the drop in Deutsche Post's long position.The idea behind BYD Company Limited and Deutsche Post AG 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.| Deutsche Post vs. ZTO Express | Deutsche Post vs. Superior Plus Corp | Deutsche Post vs. Origin Agritech | Deutsche Post vs. Identiv |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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