Correlation Between Wuxi Chemical and BYD Co
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By analyzing existing cross correlation between Wuxi Chemical Equipment and BYD Co Ltd, you can compare the effects of market volatilities on Wuxi Chemical 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 Wuxi Chemical with a short position of BYD Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuxi Chemical and BYD Co.
Diversification Opportunities for Wuxi Chemical and BYD Co
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wuxi and BYD is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wuxi Chemical Equipment and BYD Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Wuxi Chemical 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 Wuxi Chemical Equipment 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 Wuxi Chemical i.e., Wuxi Chemical and BYD Co go up and down completely randomly.
Pair Corralation between Wuxi Chemical and BYD Co
Assuming the 90 days trading horizon Wuxi Chemical Equipment is expected to under-perform the BYD Co. But the stock apears to be less risky and, when comparing its historical volatility, Wuxi Chemical Equipment is 3.01 times less risky than BYD Co. The stock trades about -0.06 of its potential returns per unit of risk. The BYD Co Ltd is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 28,280 in BYD Co Ltd on December 2, 2024 and sell it today you would earn a total of 7,902 from holding BYD Co Ltd or generate 27.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Wuxi Chemical Equipment vs. BYD Co Ltd
Performance |
Timeline |
Wuxi Chemical Equipment |
BYD Co |
Wuxi Chemical and BYD Co Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wuxi Chemical and BYD Co
The main advantage of trading using opposite Wuxi Chemical and BYD Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuxi Chemical 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.Wuxi Chemical vs. Elite Color Environmental | Wuxi Chemical vs. Hangzhou Guotai Environmental | Wuxi Chemical vs. Zoje Resources Investment | Wuxi Chemical vs. Zhejiang Construction Investment |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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