Correlation Between FLOW TRADERS and BYD Company
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and BYD Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and BYD Company Limited, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of BYD Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and BYD Company.
Diversification Opportunities for FLOW TRADERS and BYD Company
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FLOW and BYD is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited and FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and BYD Company go up and down completely randomly.
Pair Corralation between FLOW TRADERS and BYD Company
Assuming the 90 days horizon FLOW TRADERS is expected to generate 1.27 times less return on investment than BYD Company. But when comparing it to its historical volatility, FLOW TRADERS LTD is 2.35 times less risky than BYD Company. It trades about 0.19 of its potential returns per unit of risk. BYD Company Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,500 in BYD Company Limited on September 12, 2024 and sell it today you would earn a total of 1,050 from holding BYD Company Limited or generate 19.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. BYD Company Limited
Performance |
| Timeline |
| FLOW TRADERS LTD |
| BYD Limited |
FLOW TRADERS and BYD Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and BYD Company
The main advantage of trading using opposite FLOW TRADERS and BYD Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. SIVERS SEMICONDUCTORS AB | FLOW TRADERS vs. CHINA HUARONG ENERHD 50 | FLOW TRADERS vs. NORDIC HALIBUT AS |
| BYD Company vs. Nissan Chemical Corp | BYD Company vs. INDO RAMA SYNTHETIC | BYD Company vs. ON SEMICONDUCTOR | BYD Company vs. Shin Etsu Chemical Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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