Correlation Between BYD Co and 6325C0EB3

Can any of the company-specific risk be diversified away by investing in both BYD Co and 6325C0EB3 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 BYD Co and 6325C0EB3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BYD Co Ltd and NAB 1887 12 JAN 27, you can compare the effects of market volatilities on BYD Co and 6325C0EB3 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 BYD Co with a short position of 6325C0EB3. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and 6325C0EB3.

Diversification Opportunities for BYD Co and 6325C0EB3

-0.67

Correlation Coefficient

BYD Co  6325C0EB3

Excellent diversification

The 3 months correlation between BYD and 6325C0EB3 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and NAB 1887 12 JAN 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAB 1887 12 and BYD Co 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 BYD Co Ltd are associated (or correlated) with 6325C0EB3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAB 1887 12 has no effect on the direction of BYD Co i.e., BYD Co and 6325C0EB3 go up and down completely randomly.

Pair Corralation between BYD Co and 6325C0EB3

Assuming the 90 days horizon BYD Co Ltd is expected to generate 13.05 times more return on investment than 6325C0EB3. However, BYD Co is 13.05 times more volatile than NAB 1887 12 JAN 27. It trades about 0.01 of its potential returns per unit of risk. NAB 1887 12 JAN 27 is currently generating about -0.16 per unit of risk. If you would invest  7,096  in BYD Co Ltd on September 29, 2024 and sell it today you would lose (92.00) from holding BYD Co Ltd or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.57%
Values	Daily Returns

BYD Co Ltd  vs.  NAB 1887 12 JAN 27

BYD Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BYD Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, BYD Co is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

NAB 1887 12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAB 1887 12 JAN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, 6325C0EB3 is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BYD Co and 6325C0EB3

The main advantage of trading using opposite BYD Co and 6325C0EB3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, 6325C0EB3 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 6325C0EB3 will offset losses from the drop in 6325C0EB3's long position.

The idea behind BYD Co Ltd and NAB 1887 12 JAN 27 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.