Correlation Between BYD Co and Risk George

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

Diversification Opportunities for BYD Co and Risk George

-0.73

Correlation Coefficient

BYD Co  Risk George

Pay attention - limited upside

The 3 months correlation between BYD and Risk is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and Risk George Inds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risk George Inds 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 Risk George. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risk George Inds has no effect on the direction of BYD Co i.e., BYD Co and Risk George go up and down completely randomly.

Pair Corralation between BYD Co and Risk George

Assuming the 90 days horizon BYD Co Ltd is expected to under-perform the Risk George. But the pink sheet apears to be less risky and, when comparing its historical volatility, BYD Co Ltd is 1.21 times less risky than Risk George. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Risk George Inds is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,660  in Risk George Inds on October 14, 2024 and sell it today you would lose (10.00) from holding Risk George Inds or give up 0.6% of portfolio value over 90 days.

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

BYD Co Ltd  vs.  Risk George Inds

BYD Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BYD Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Risk George Inds

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Risk George Inds are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Risk George may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BYD Co and Risk George

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

The idea behind BYD Co Ltd and Risk George Inds 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.