Correlation Between BYD Co and Arhaus

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

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

Diversification Opportunities for BYD Co and Arhaus

-0.51

Correlation Coefficient

BYD Co  Arhaus

Excellent diversification

The 3 months correlation between BYD and Arhaus is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and BYD Co 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 Ltd are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of BYD Co i.e., BYD Co and Arhaus go up and down completely randomly.

Pair Corralation between BYD Co and Arhaus

Assuming the 90 days horizon BYD Co is expected to generate 1.39 times less return on investment than Arhaus. But when comparing it to its historical volatility, BYD Co Ltd is 1.76 times less risky than Arhaus. It trades about 0.01 of its potential returns per unit of risk. Arhaus Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  971.00  in Arhaus Inc on September 21, 2024 and sell it today you would lose (10.00) from holding Arhaus Inc or give up 1.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

BYD Co Ltd  vs.  Arhaus Inc

BYD Co

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, BYD Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc 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 technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BYD Co and Arhaus

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

The idea behind BYD Co Ltd and Arhaus Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.