Correlation Between NexteGO NV and BYD Company
Can any of the company-specific risk be diversified away by investing in both NexteGO NV 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 NexteGO NV and BYD Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexteGO NV Ordinary and BYD Company Limited, you can compare the effects of market volatilities on NexteGO NV 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 NexteGO NV with a short position of BYD Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexteGO NV and BYD Company.
Diversification Opportunities for NexteGO NV and BYD Company
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NexteGO and BYD is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NexteGO NV Ordinary and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited and NexteGO NV 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 NexteGO NV Ordinary 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 NexteGO NV i.e., NexteGO NV and BYD Company go up and down completely randomly.
Pair Corralation between NexteGO NV and BYD Company
Given the investment horizon of 90 days NexteGO NV Ordinary is expected to under-perform the BYD Company. In addition to that, NexteGO NV is 14.31 times more volatile than BYD Company Limited. It trades about -0.02 of its total potential returns per unit of risk. BYD Company Limited is currently generating about 0.04 per unit of volatility. If you would invest 2,409 in BYD Company Limited on August 26, 2024 and sell it today you would earn a total of 931.00 from holding BYD Company Limited or generate 38.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 56.54% |
| Values | Daily Returns |
NexteGO NV Ordinary vs. BYD Company Limited
Performance |
| Timeline |
| NexteGO NV Ordinary |
| BYD Limited |
NexteGO NV and BYD Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexteGO NV and BYD Company
The main advantage of trading using opposite NexteGO NV and BYD Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexteGO NV 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.| NexteGO NV vs. Nio Class A | NexteGO NV vs. Rivian Automotive | NexteGO NV vs. Lucid Group | NexteGO NV vs. Tesla Inc |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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