Correlation Between BYD Co and BYD Company
Can any of the company-specific risk be diversified away by investing in both BYD Co and BYD Company 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 Co and BYD Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co Ltd and BYD Company Limited, you can compare the effects of market volatilities on BYD Co and BYD Company 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 Co with a short position of BYD Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and BYD Company.
Diversification Opportunities for BYD Co and BYD Company
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between BYD and BYD is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited and BYD Co 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 Co Ltd are associated (or correlated) with BYD Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Limited has no effect on the direction of BYD Co i.e., BYD Co and BYD Company go up and down completely randomly.
Pair Corralation between BYD Co and BYD Company
Assuming the 90 days horizon BYD Co Ltd is expected to under-perform the BYD Company. But the pink sheet apears to be less risky and, when comparing its historical volatility, BYD Co Ltd is 1.02 times less risky than BYD Company. The pink sheet trades about -0.29 of its potential returns per unit of risk. The BYD Company Limited is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest 3,832 in BYD Company Limited on August 27, 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co Ltd vs. BYD Company Limited
Performance |
| Timeline |
| BYD Co |
| BYD Limited |
BYD Co and BYD Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and BYD Company
The main advantage of trading using opposite BYD Co and BYD Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, BYD Company 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 BYD Company will offset losses from the drop in BYD Company's long position.| BYD Co vs. FitLife Brands, Common | BYD Co vs. HUMANA INC | BYD Co vs. SCOR PK | BYD Co vs. Aquagold International |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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