Correlation Between CureVac NV and BYD Company

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

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

Diversification Opportunities for CureVac NV and BYD Company

0.02

Correlation Coefficient

CureVac NV  BYD Company

Significant diversification

The 3 months correlation between CureVac and BYD is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CureVac NV and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited and CureVac NV 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 CureVac NV are associated (or correlated) with BYD Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Limited has no effect on the direction of CureVac NV i.e., CureVac NV and BYD Company go up and down completely randomly.

Pair Corralation between CureVac NV and BYD Company

Assuming the 90 days horizon CureVac NV is expected to generate 2.57 times less return on investment than BYD Company. In addition to that, CureVac NV is 1.74 times more volatile than BYD Company Limited. It trades about 0.06 of its total potential returns per unit of risk. BYD Company Limited is currently generating about 0.28 per unit of volatility. If you would invest  3,113  in BYD Company Limited on November 29, 2024 and sell it today you would earn a total of  1,655  from holding BYD Company Limited or generate 53.16% return on investment over 90 days.

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

CureVac NV  vs.  BYD Company Limited

CureVac NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CureVac NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CureVac NV reported solid returns over the last few months and may actually be approaching a breakup point.

BYD Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Company Limited are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BYD Company reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CureVac NV and BYD Company

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

The idea behind CureVac NV and BYD Company Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.