Correlation Between BYD and Schweiter Technologies

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

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

Diversification Opportunities for BYD and Schweiter Technologies

0.01

Correlation Coefficient

BYD  Schweiter Technologies

Significant diversification

The 3 months correlation between BYD and Schweiter is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of BYD i.e., BYD and Schweiter Technologies go up and down completely randomly.

Pair Corralation between BYD and Schweiter Technologies

Assuming the 90 days trading horizon BYD is expected to generate 1.63 times less return on investment than Schweiter Technologies. In addition to that, BYD is 2.48 times more volatile than Schweiter Technologies AG. It trades about 0.03 of its total potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.11 per unit of volatility. If you would invest  41,600  in Schweiter Technologies AG on October 26, 2024 and sell it today you would earn a total of  5,750  from holding Schweiter Technologies AG or generate 13.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BYD Co  vs.  Schweiter Technologies AG

BYD Co

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co are ranked lower than 2 (%) 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.

Schweiter Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Schweiter Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BYD and Schweiter Technologies

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

The idea behind BYD Co and Schweiter Technologies AG 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..