Correlation Between Dalata Hotel and BYD

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

By analyzing existing cross correlation between Dalata Hotel Group and BYD Co, you can compare the effects of market volatilities on Dalata Hotel 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 Dalata Hotel with a short position of BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalata Hotel and BYD.

Diversification Opportunities for Dalata Hotel and BYD

0.11

Correlation Coefficient

Dalata Hotel  BYD

Average diversification

The 3 months correlation between Dalata and BYD is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Dalata Hotel 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 Dalata Hotel Group 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 Dalata Hotel i.e., Dalata Hotel and BYD go up and down completely randomly.

Pair Corralation between Dalata Hotel and BYD

Assuming the 90 days trading horizon Dalata Hotel is expected to generate 3.8 times less return on investment than BYD. But when comparing it to its historical volatility, Dalata Hotel Group is 3.72 times less risky than BYD. It trades about 0.04 of its potential returns per unit of risk. BYD Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,560  in BYD Co on September 5, 2024 and sell it today you would earn a total of  0.00  from holding BYD Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Dalata Hotel Group  vs.  BYD Co

Dalata Hotel Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Dalata Hotel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

BYD Co

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, BYD unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dalata Hotel and BYD

The main advantage of trading using opposite Dalata Hotel and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalata Hotel 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.

The idea behind Dalata Hotel Group and BYD Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..