Correlation Between BYD Company and Illumina
Can any of the company-specific risk be diversified away by investing in both BYD Company and Illumina 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 Illumina 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 Illumina, you can compare the effects of market volatilities on BYD Company and Illumina 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 Illumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and Illumina.
Diversification Opportunities for BYD Company and Illumina
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BYD and Illumina is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of BYD Company i.e., BYD Company and Illumina go up and down completely randomly.
Pair Corralation between BYD Company and Illumina
Assuming the 90 days trading horizon BYD Company Limited is expected to generate 0.79 times more return on investment than Illumina. However, BYD Company Limited is 1.27 times less risky than Illumina. It trades about -0.01 of its potential returns per unit of risk. Illumina is currently generating about -0.01 per unit of risk. If you would invest 6,400 in BYD Company Limited on September 2, 2024 and sell it today you would lose (50.00) from holding BYD Company Limited or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Company Limited vs. Illumina
Performance |
| Timeline |
| BYD Limited |
| Illumina |
BYD Company and Illumina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and Illumina
The main advantage of trading using opposite BYD Company and Illumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, Illumina 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 Illumina will offset losses from the drop in Illumina's long position.| BYD Company vs. Beyond Meat | BYD Company vs. Food Life Companies | BYD Company vs. Carsales | BYD Company vs. AUSTEVOLL SEAFOOD |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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