Correlation Between BYD Co and Black Knight

Can any of the company-specific risk be diversified away by investing in both BYD Co and Black Knight 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 Black Knight 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 Black Knight, you can compare the effects of market volatilities on BYD Co and Black Knight 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 Black Knight. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Black Knight.

Diversification Opportunities for BYD Co and Black Knight

-0.35

Correlation Coefficient

BYD Co  Black Knight

Very good diversification

The 3 months correlation between BYD and Black is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and Black Knight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Knight 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 Black Knight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Knight has no effect on the direction of BYD Co i.e., BYD Co and Black Knight go up and down completely randomly.

Pair Corralation between BYD Co and Black Knight

If you would invest  6,678  in BYD Co Ltd on September 23, 2024 and sell it today you would earn a total of  232.00  from holding BYD Co Ltd or generate 3.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

BYD Co Ltd  vs.  Black Knight

BYD Co

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, BYD Co showed solid returns over the last few months and may actually be approaching a breakup point.

Black Knight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Knight is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BYD Co and Black Knight

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

The idea behind BYD Co Ltd and Black Knight 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.