Correlation Between AGRICUL BK and BYD Company
Can any of the company-specific risk be diversified away by investing in both AGRICUL BK 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 AGRICUL BK and BYD Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICUL BK CHINA H and BYD Company Limited, you can compare the effects of market volatilities on AGRICUL BK 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 AGRICUL BK with a short position of BYD Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICUL BK and BYD Company.
Diversification Opportunities for AGRICUL BK and BYD Company
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGRICUL and BYD is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding AGRICUL BK CHINA H and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited and AGRICUL BK 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 AGRICUL BK CHINA H 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 AGRICUL BK i.e., AGRICUL BK and BYD Company go up and down completely randomly.
Pair Corralation between AGRICUL BK and BYD Company
Assuming the 90 days trading horizon AGRICUL BK CHINA H is expected to generate 0.86 times more return on investment than BYD Company. However, AGRICUL BK CHINA H is 1.16 times less risky than BYD Company. It trades about 0.06 of its potential returns per unit of risk. BYD Company Limited is currently generating about -0.24 per unit of risk. If you would invest 45.00 in AGRICUL BK CHINA H on August 31, 2024 and sell it today you would earn a total of 1.00 from holding AGRICUL BK CHINA H or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AGRICUL BK CHINA H vs. BYD Company Limited
Performance |
| Timeline |
| AGRICUL BK CHINA |
| BYD Limited |
AGRICUL BK and BYD Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICUL BK and BYD Company
The main advantage of trading using opposite AGRICUL BK and BYD Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICUL BK 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.| AGRICUL BK vs. Check Point Software | AGRICUL BK vs. Verizon Communications | AGRICUL BK vs. CPU SOFTWAREHOUSE | AGRICUL BK vs. Ribbon Communications |
| BYD Company vs. CHEMICAL INDUSTRIES | BYD Company vs. Sumitomo Chemical | BYD Company vs. Magnachip Semiconductor | BYD Company vs. Mitsubishi Gas Chemical |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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