Correlation Between Makita and BYD ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both Makita and BYD ELECTRONIC 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 Makita and BYD ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Makita and BYD ELECTRONIC, you can compare the effects of market volatilities on Makita and BYD ELECTRONIC 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 Makita with a short position of BYD ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Makita and BYD ELECTRONIC.
Diversification Opportunities for Makita and BYD ELECTRONIC
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Makita and BYD is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Makita and BYD ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD ELECTRONIC and Makita 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 Makita are associated (or correlated) with BYD ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD ELECTRONIC has no effect on the direction of Makita i.e., Makita and BYD ELECTRONIC go up and down completely randomly.
Pair Corralation between Makita and BYD ELECTRONIC
Assuming the 90 days trading horizon Makita is expected to generate 1.43 times more return on investment than BYD ELECTRONIC. However, Makita is 1.43 times more volatile than BYD ELECTRONIC. It trades about 0.07 of its potential returns per unit of risk. BYD ELECTRONIC is currently generating about 0.04 per unit of risk. If you would invest 649.00 in Makita on September 3, 2024 and sell it today you would earn a total of 2,275 from holding Makita or generate 350.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Makita vs. BYD ELECTRONIC
Performance |
| Timeline |
| Makita |
| BYD ELECTRONIC |
Makita and BYD ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Makita and BYD ELECTRONIC
The main advantage of trading using opposite Makita and BYD ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Makita position performs unexpectedly, BYD ELECTRONIC 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 ELECTRONIC will offset losses from the drop in BYD ELECTRONIC's long position.| Makita vs. BYD ELECTRONIC | Makita vs. Geely Automobile Holdings | Makita vs. GEELY AUTOMOBILE | Makita vs. ARROW ELECTRONICS |
| BYD ELECTRONIC vs. RETAIL FOOD GROUP | BYD ELECTRONIC vs. MOLSON RS BEVERAGE | BYD ELECTRONIC vs. GEELY AUTOMOBILE | BYD ELECTRONIC vs. National Retail Properties |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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