Correlation Between BYD Co and G Bits

Can any of the company-specific risk be diversified away by investing in both BYD Co and G Bits 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 G Bits 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 G bits Network Technology, you can compare the effects of market volatilities on BYD Co and G Bits 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 G Bits. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and G Bits.

Diversification Opportunities for BYD Co and G Bits

0.81

Correlation Coefficient

BYD Co  G Bits

Very poor diversification

The 3 months correlation between BYD and 603444 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and G bits Network Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G bits Network 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 G Bits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G bits Network has no effect on the direction of BYD Co i.e., BYD Co and G Bits go up and down completely randomly.

Pair Corralation between BYD Co and G Bits

Assuming the 90 days trading horizon BYD Co Ltd is expected to generate 0.75 times more return on investment than G Bits. However, BYD Co Ltd is 1.33 times less risky than G Bits. It trades about 0.09 of its potential returns per unit of risk. G bits Network Technology is currently generating about 0.03 per unit of risk. If you would invest  25,285  in BYD Co Ltd on September 5, 2024 and sell it today you would earn a total of  2,980  from holding BYD Co Ltd or generate 11.79% 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.  G bits Network Technology

BYD Co

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co Ltd are ranked lower than 6 (%) 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.

G bits Network

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in G bits Network Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, G Bits 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 G Bits

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

The idea behind BYD Co Ltd and G bits Network Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.