Correlation Between BYD and Gruppo MutuiOnline

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

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

Diversification Opportunities for BYD and Gruppo MutuiOnline

0.21

Correlation Coefficient

BYD  Gruppo MutuiOnline

Modest diversification

The 3 months correlation between BYD and Gruppo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Gruppo MutuiOnline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo MutuiOnline SpA 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 Gruppo MutuiOnline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo MutuiOnline SpA has no effect on the direction of BYD i.e., BYD and Gruppo MutuiOnline go up and down completely randomly.

Pair Corralation between BYD and Gruppo MutuiOnline

Assuming the 90 days trading horizon BYD is expected to generate 6.72 times less return on investment than Gruppo MutuiOnline. But when comparing it to its historical volatility, BYD Co is 3.32 times less risky than Gruppo MutuiOnline. It trades about 0.07 of its potential returns per unit of risk. Gruppo MutuiOnline SpA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,207  in Gruppo MutuiOnline SpA on October 9, 2024 and sell it today you would earn a total of  454.00  from holding Gruppo MutuiOnline SpA or generate 14.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	58.63%
Values	Daily Returns

BYD Co  vs.  Gruppo MutuiOnline SpA

BYD Co

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BYD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gruppo MutuiOnline SpA

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Gruppo MutuiOnline SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Gruppo MutuiOnline unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BYD and Gruppo MutuiOnline

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

The idea behind BYD Co and Gruppo MutuiOnline SpA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..