Correlation Between BYD Co and Soochow Securities

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

By analyzing existing cross correlation between BYD Co Ltd and Soochow Securities Co, you can compare the effects of market volatilities on BYD Co and Soochow Securities 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 Soochow Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Soochow Securities.

Diversification Opportunities for BYD Co and Soochow Securities

0.0

Correlation Coefficient

BYD Co  Soochow Securities

Pay attention - limited upside

The 3 months correlation between BYD and Soochow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and Soochow Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soochow Securities 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 Soochow Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soochow Securities has no effect on the direction of BYD Co i.e., BYD Co and Soochow Securities go up and down completely randomly.

Pair Corralation between BYD Co and Soochow Securities

If you would invest  28,499  in BYD Co Ltd on December 29, 2024 and sell it today you would earn a total of  9,751  from holding BYD Co Ltd or generate 34.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BYD Co Ltd  vs.  Soochow Securities Co

BYD Co

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co Ltd are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BYD Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Soochow Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Soochow Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Soochow Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BYD Co and Soochow Securities

The main advantage of trading using opposite BYD Co and Soochow Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co position performs unexpectedly, Soochow Securities 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 Soochow Securities will offset losses from the drop in Soochow Securities' long position.

The idea behind BYD Co Ltd and Soochow Securities 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.