Correlation Between Personal Group and BYD

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

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

Diversification Opportunities for Personal Group and BYD

0.22

Correlation Coefficient

Personal Group  BYD

Modest diversification

The 3 months correlation between Personal and BYD is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Personal Group Holdings and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Personal Group 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 Personal Group Holdings 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 Personal Group i.e., Personal Group and BYD go up and down completely randomly.

Pair Corralation between Personal Group and BYD

Assuming the 90 days trading horizon Personal Group Holdings is expected to under-perform the BYD. But the stock apears to be less risky and, when comparing its historical volatility, Personal Group Holdings is 2.58 times less risky than BYD. The stock trades about -0.02 of its potential returns per unit of risk. The BYD Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,560  in BYD Co on September 16, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Personal Group Holdings  vs.  BYD Co

Personal Group Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Personal Group Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Personal Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

BYD Co

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BYD unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Personal Group and BYD

The main advantage of trading using opposite Personal Group and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Personal Group 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 Personal Group Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.