Correlation Between BYD and Fortuna Silver

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

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

Diversification Opportunities for BYD and Fortuna Silver

0.06

Correlation Coefficient

BYD  Fortuna Silver

Significant diversification

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

Pair Corralation between BYD and Fortuna Silver

Assuming the 90 days trading horizon BYD Co is expected to generate 1.96 times more return on investment than Fortuna Silver. However, BYD is 1.96 times more volatile than Fortuna Silver Mines. It trades about 0.05 of its potential returns per unit of risk. Fortuna Silver Mines is currently generating about 0.05 per unit of risk. If you would invest  3,505  in BYD Co on October 24, 2024 and sell it today you would earn a total of  55.00  from holding BYD Co or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	36.02%
Values	Daily Returns

BYD Co  vs.  Fortuna Silver Mines

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.

Fortuna Silver Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortuna Silver Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BYD and Fortuna Silver

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

The idea behind BYD Co and Fortuna Silver Mines 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.