Correlation Between BYD Company and GM
Can any of the company-specific risk be diversified away by investing in both BYD Company and GM 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 GM 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 General Motors, you can compare the effects of market volatilities on BYD Company and GM 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 GM. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and GM.
Diversification Opportunities for BYD Company and GM
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between BYD and GM is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors 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 GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of BYD Company i.e., BYD Company and GM go up and down completely randomly.
Pair Corralation between BYD Company and GM
Assuming the 90 days horizon BYD Company is expected to generate 3.61 times less return on investment than GM. In addition to that, BYD Company is 1.12 times more volatile than General Motors. It trades about 0.02 of its total potential returns per unit of risk. General Motors is currently generating about 0.07 per unit of volatility. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Company Limited vs. General Motors
Performance |
| Timeline |
| BYD Limited |
| General Motors |
BYD Company and GM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and GM
The main advantage of trading using opposite BYD Company and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, GM 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 GM will offset losses from the drop in GM's long position.| BYD Company vs. Li Auto | BYD Company vs. Xpeng Inc | BYD Company vs. Rivian Automotive | BYD Company vs. Nio Class A |
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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