Correlation Between Faraday Future and BYD Co
Can any of the company-specific risk be diversified away by investing in both Faraday Future and BYD Co 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 Faraday Future and BYD Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faraday Future Intelligent and BYD Co Ltd, you can compare the effects of market volatilities on Faraday Future and BYD Co 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 Faraday Future with a short position of BYD Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and BYD Co.
Diversification Opportunities for Faraday Future and BYD Co
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Faraday and BYD is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and BYD Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Faraday Future 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 Faraday Future Intelligent are associated (or correlated) with BYD Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of Faraday Future i.e., Faraday Future and BYD Co go up and down completely randomly.
Pair Corralation between Faraday Future and BYD Co
Given the investment horizon of 90 days Faraday Future Intelligent is expected to under-perform the BYD Co. In addition to that, Faraday Future is 2.49 times more volatile than BYD Co Ltd. It trades about -0.41 of its total potential returns per unit of risk. BYD Co Ltd is currently generating about -0.28 per unit of volatility. If you would invest 7,640 in BYD Co Ltd on August 28, 2024 and sell it today you would lose (980.00) from holding BYD Co Ltd or give up 12.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Future Intelligent vs. BYD Co Ltd
Performance |
| Timeline |
| Faraday Future Intel |
| BYD Co |
Faraday Future and BYD Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and BYD Co
The main advantage of trading using opposite Faraday Future and BYD Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, BYD Co 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 Co will offset losses from the drop in BYD Co's long position.The idea behind Faraday Future Intelligent and BYD Co Ltd 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.| BYD Co vs. FitLife Brands, Common | BYD Co vs. HUMANA INC | BYD Co vs. SCOR PK | BYD Co vs. Aquagold International |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |