Correlation Between BYD Co and Suzuki
Can any of the company-specific risk be diversified away by investing in both BYD Co and Suzuki 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 Suzuki 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 Suzuki Motor Corp, you can compare the effects of market volatilities on BYD Co and Suzuki 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 Suzuki. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Suzuki.
Diversification Opportunities for BYD Co and Suzuki
Excellent diversification
The 3 months correlation between BYD and Suzuki is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and Suzuki Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzuki Motor Corp 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 Suzuki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzuki Motor Corp has no effect on the direction of BYD Co i.e., BYD Co and Suzuki go up and down completely randomly.
Pair Corralation between BYD Co and Suzuki
Assuming the 90 days horizon BYD Co is expected to generate 1.92 times less return on investment than Suzuki. In addition to that, BYD Co is 1.24 times more volatile than Suzuki Motor Corp. It trades about 0.02 of its total potential returns per unit of risk. Suzuki Motor Corp is currently generating about 0.04 per unit of volatility. If you would invest 3,420 in Suzuki Motor Corp on August 31, 2024 and sell it today you would earn a total of 818.00 from holding Suzuki Motor Corp or generate 23.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co Ltd vs. Suzuki Motor Corp
Performance |
| Timeline |
| BYD Co |
| Suzuki Motor Corp |
BYD Co and Suzuki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and Suzuki
The main advantage of trading using opposite BYD Co and Suzuki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, Suzuki 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 Suzuki will offset losses from the drop in Suzuki's long position.The idea behind BYD Co Ltd and Suzuki Motor Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Suzuki vs. Isuzu Motors | Suzuki vs. Honda Motor Co | Suzuki vs. Porsche Automobil Holding | Suzuki vs. Mazda Motor Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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