Correlation Between BYD Company and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both BYD Company and Geely Automobile 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 Geely Automobile 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 Geely Automobile Holdings, you can compare the effects of market volatilities on BYD Company and Geely Automobile 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 Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and Geely Automobile.
Diversification Opportunities for BYD Company and Geely Automobile
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BYD and Geely is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings 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 Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of BYD Company i.e., BYD Company and Geely Automobile go up and down completely randomly.
Pair Corralation between BYD Company and Geely Automobile
Assuming the 90 days horizon BYD Company Limited is expected to generate 0.93 times more return on investment than Geely Automobile. However, BYD Company Limited is 1.08 times less risky than Geely Automobile. It trades about 0.04 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.02 per unit of risk. If you would invest 2,409 in BYD Company Limited on August 24, 2024 and sell it today you would earn a total of 931.00 from holding BYD Company Limited or generate 38.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Company Limited vs. Geely Automobile Holdings
Performance |
| Timeline |
| BYD Limited |
| Geely Automobile Holdings |
BYD Company and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and Geely Automobile
The main advantage of trading using opposite BYD Company and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.| BYD Company vs. Isuzu Motors | BYD Company vs. Renault SA | BYD Company vs. Mazda Motor Corp | BYD Company vs. Bayerische Motoren Werke |
| Geely Automobile vs. Great Wall Motor | Geely Automobile vs. Polestar Automotive Holding | Geely Automobile vs. Dowlais Group plc | Geely Automobile vs. BYD Company Limited |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |