Correlation Between BYD Company and Lucid
Can any of the company-specific risk be diversified away by investing in both BYD Company and Lucid 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 Lucid 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 Lucid Group, you can compare the effects of market volatilities on BYD Company and Lucid 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 Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and Lucid.
Diversification Opportunities for BYD Company and Lucid
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYD and Lucid is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group 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 Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of BYD Company i.e., BYD Company and Lucid go up and down completely randomly.
Pair Corralation between BYD Company and Lucid
Assuming the 90 days horizon BYD Company Limited is expected to generate 0.61 times more return on investment than Lucid. However, BYD Company Limited is 1.64 times less risky than Lucid. It trades about -0.14 of its potential returns per unit of risk. Lucid Group is currently generating about -0.21 per unit of risk. If you would invest 3,660 in BYD Company Limited on August 24, 2024 and sell it today you would lose (275.00) from holding BYD Company Limited or give up 7.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Company Limited vs. Lucid Group
Performance |
| Timeline |
| BYD Limited |
| Lucid Group |
BYD Company and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and Lucid
The main advantage of trading using opposite BYD Company and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, Lucid 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 Lucid will offset losses from the drop in Lucid'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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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