Correlation Between BYD Co and Tianjin Pengling
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By analyzing existing cross correlation between BYD Co Ltd and Tianjin Pengling Rubber, you can compare the effects of market volatilities on BYD Co and Tianjin Pengling 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 Tianjin Pengling. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Tianjin Pengling.
Diversification Opportunities for BYD Co and Tianjin Pengling
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BYD and Tianjin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and Tianjin Pengling Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Pengling Rubber 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 Tianjin Pengling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Pengling Rubber has no effect on the direction of BYD Co i.e., BYD Co and Tianjin Pengling go up and down completely randomly.
Pair Corralation between BYD Co and Tianjin Pengling
Assuming the 90 days trading horizon BYD Co is expected to generate 4.64 times less return on investment than Tianjin Pengling. But when comparing it to its historical volatility, BYD Co Ltd is 1.82 times less risky than Tianjin Pengling. It trades about 0.02 of its potential returns per unit of risk. Tianjin Pengling Rubber is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 366.00 in Tianjin Pengling Rubber on September 6, 2024 and sell it today you would earn a total of 158.00 from holding Tianjin Pengling Rubber or generate 43.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
BYD Co Ltd vs. Tianjin Pengling Rubber
Performance |
Timeline |
BYD Co |
Tianjin Pengling Rubber |
BYD Co and Tianjin Pengling Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BYD Co and Tianjin Pengling
The main advantage of trading using opposite BYD Co and Tianjin Pengling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, Tianjin Pengling 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 Tianjin Pengling will offset losses from the drop in Tianjin Pengling's long position.BYD Co vs. Anhui Fuhuang Steel | BYD Co vs. Guangzhou Ruoyuchen Information | BYD Co vs. Gansu Jiu Steel | BYD Co vs. CITIC Guoan Information |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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