Correlation Between BYD and Ion Beam

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

By analyzing existing cross correlation between BYD Co and Ion Beam Applications, you can compare the effects of market volatilities on BYD and Ion Beam 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 with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and Ion Beam.

Diversification Opportunities for BYD and Ion Beam

-0.06

Correlation Coefficient

BYD  Ion Beam

Good diversification

The 3 months correlation between BYD and Ion is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and BYD 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 are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of BYD i.e., BYD and Ion Beam go up and down completely randomly.

Pair Corralation between BYD and Ion Beam

Assuming the 90 days trading horizon BYD Co is expected to generate 2.73 times more return on investment than Ion Beam. However, BYD is 2.73 times more volatile than Ion Beam Applications. It trades about 0.03 of its potential returns per unit of risk. Ion Beam Applications is currently generating about -0.01 per unit of risk. If you would invest  3,560  in BYD Co on October 25, 2024 and sell it today you would earn a total of  0.00  from holding BYD Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

BYD Co  vs.  Ion Beam Applications

BYD Co

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days BYD Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, BYD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ion Beam is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BYD and Ion Beam

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

The idea behind BYD Co and Ion Beam Applications 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.