Correlation Between Republic Bancorp and BYD Co

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Can any of the company-specific risk be diversified away by investing in both Republic Bancorp and BYD Co 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 Republic Bancorp and BYD Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Republic Bancorp and BYD Co Ltd, you can compare the effects of market volatilities on Republic Bancorp and BYD Co 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 Republic Bancorp with a short position of BYD Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Republic Bancorp and BYD Co.

Diversification Opportunities for Republic Bancorp and BYD Co

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Republic and BYD is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and BYD Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Republic Bancorp 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 Republic Bancorp are associated (or correlated) with BYD Co. 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 Republic Bancorp i.e., Republic Bancorp and BYD Co go up and down completely randomly.

Pair Corralation between Republic Bancorp and BYD Co

Assuming the 90 days horizon Republic Bancorp is expected to generate 1.14 times less return on investment than BYD Co. But when comparing it to its historical volatility, Republic Bancorp is 1.17 times less risky than BYD Co. It trades about 0.07 of its potential returns per unit of risk. BYD Co Ltd is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,223  in BYD Co Ltd on September 23, 2024 and sell it today you would earn a total of  687.00  from holding BYD Co Ltd or generate 11.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Republic Bancorp  vs.  BYD Co Ltd

 Performance 
       Timeline  
Republic Bancorp 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Republic Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Republic Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
BYD Co 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, BYD Co showed solid returns over the last few months and may actually be approaching a breakup point.

Republic Bancorp and BYD Co Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Republic Bancorp and BYD Co

The main advantage of trading using opposite Republic Bancorp and BYD Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Republic Bancorp position performs unexpectedly, BYD Co 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 Co will offset losses from the drop in BYD Co's long position.
The idea behind Republic Bancorp and BYD Co Ltd 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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