Correlation Between BYD Company and Polestar Automotive
Can any of the company-specific risk be diversified away by investing in both BYD Company and Polestar Automotive 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 Polestar Automotive 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 Polestar Automotive Holding, you can compare the effects of market volatilities on BYD Company and Polestar Automotive 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 Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Company and Polestar Automotive.
Diversification Opportunities for BYD Company and Polestar Automotive
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between BYD and Polestar is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BYD Company Limited and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive 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 Polestar Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polestar Automotive has no effect on the direction of BYD Company i.e., BYD Company and Polestar Automotive go up and down completely randomly.
Pair Corralation between BYD Company and Polestar Automotive
Assuming the 90 days horizon BYD Company Limited is expected to generate 0.29 times more return on investment than Polestar Automotive. However, BYD Company Limited is 3.39 times less risky than Polestar Automotive. It trades about -0.28 of its potential returns per unit of risk. Polestar Automotive Holding is currently generating about -0.2 per unit of risk. If you would invest 3,832 in BYD Company Limited on August 28, 2024 and sell it today you would lose (487.00) from holding BYD Company Limited or give up 12.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Company Limited vs. Polestar Automotive Holding
Performance |
| Timeline |
| BYD Limited |
| Polestar Automotive |
BYD Company and Polestar Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Company and Polestar Automotive
The main advantage of trading using opposite BYD Company and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Company position performs unexpectedly, Polestar Automotive 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 Polestar Automotive will offset losses from the drop in Polestar Automotive's long position.| BYD Company vs. Isuzu Motors | BYD Company vs. Renault SA | BYD Company vs. Toyota Motor Corp | BYD Company vs. Porsche Automobile Holding |
| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Aston Martin Lagonda |
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 CEOs Directory module to screen CEOs from public companies around the world.
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