Correlation Between BYD and GoldMining

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

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

Diversification Opportunities for BYD and GoldMining

0.15

Correlation Coefficient

BYD  GoldMining

Average diversification

The 3 months correlation between BYD and GoldMining is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of BYD i.e., BYD and GoldMining go up and down completely randomly.

Pair Corralation between BYD and GoldMining

Assuming the 90 days trading horizon BYD is expected to generate 2.07 times less return on investment than GoldMining. In addition to that, BYD is 2.21 times more volatile than GoldMining. It trades about 0.03 of its total potential returns per unit of risk. GoldMining is currently generating about 0.12 per unit of volatility. If you would invest  111.00  in GoldMining on October 25, 2024 and sell it today you would earn a total of  3.00  from holding GoldMining or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	52.63%
Values	Daily Returns

BYD Co  vs.  GoldMining

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 unsteady basic indicators, BYD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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 GoldMining

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

The idea behind BYD Co and GoldMining 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.