Correlation Between Zegona Communications and BYD
Can any of the company-specific risk be diversified away by investing in both Zegona Communications and BYD 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 Zegona Communications and BYD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and BYD Co, you can compare the effects of market volatilities on Zegona Communications and BYD 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 Zegona Communications with a short position of BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and BYD.
Diversification Opportunities for Zegona Communications and BYD
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zegona and BYD is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with BYD. 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 Zegona Communications i.e., Zegona Communications and BYD go up and down completely randomly.
Pair Corralation between Zegona Communications and BYD
Assuming the 90 days trading horizon Zegona Communications is expected to generate 2.05 times less return on investment than BYD. But when comparing it to its historical volatility, Zegona Communications Plc is 2.46 times less risky than BYD. It trades about 0.11 of its potential returns per unit of risk. BYD Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,292 in BYD Co on September 13, 2024 and sell it today you would earn a total of 268.00 from holding BYD Co or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zegona Communications Plc vs. BYD Co
Performance |
| Timeline |
| Zegona Communications Plc |
| BYD Co |
Zegona Communications and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and BYD
The main advantage of trading using opposite Zegona Communications and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, BYD 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 will offset losses from the drop in BYD's long position.| Zegona Communications vs. Bloomsbury Publishing Plc | Zegona Communications vs. Solstad Offshore ASA | Zegona Communications vs. Vienna Insurance Group | Zegona Communications vs. Verizon Communications |
| BYD vs. Automatic Data Processing | BYD vs. Take Two Interactive Software | BYD vs. Auto Trader Group | BYD vs. Evolution Gaming Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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