Correlation Between Fisker and BYD Co
Can any of the company-specific risk be diversified away by investing in both Fisker 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 Fisker and BYD Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fisker Inc and BYD Co Ltd, you can compare the effects of market volatilities on Fisker 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 Fisker with a short position of BYD Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fisker and BYD Co.
Diversification Opportunities for Fisker and BYD Co
Modest diversification
The 3 months correlation between Fisker and BYD is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fisker Inc and BYD Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Fisker 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 Fisker Inc 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 Fisker i.e., Fisker and BYD Co go up and down completely randomly.
Pair Corralation between Fisker and BYD Co
Considering the 90-day investment horizon Fisker is expected to generate 1.47 times less return on investment than BYD Co. In addition to that, Fisker is 2.47 times more volatile than BYD Co Ltd. It trades about 0.01 of its total potential returns per unit of risk. BYD Co Ltd is currently generating about 0.04 per unit of volatility. If you would invest 5,031 in BYD Co Ltd on August 27, 2024 and sell it today you would earn a total of 1,647 from holding BYD Co Ltd or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.65% |
| Values | Daily Returns |
Fisker Inc vs. BYD Co Ltd
Performance |
| Timeline |
| Fisker Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BYD Co |
Fisker and BYD Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fisker and BYD Co
The main advantage of trading using opposite Fisker and BYD Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fisker 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 Fisker Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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