Correlation Between BYD Co and IENOVA

Can any of the company-specific risk be diversified away by investing in both BYD Co and IENOVA 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 IENOVA 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 IENOVA 475 15 JAN 51, you can compare the effects of market volatilities on BYD Co and IENOVA 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 IENOVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and IENOVA.

Diversification Opportunities for BYD Co and IENOVA

0.12

Correlation Coefficient

BYD Co  IENOVA

Average diversification

The 3 months correlation between BYD and IENOVA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and IENOVA 475 15 JAN 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IENOVA 475 15 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 IENOVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IENOVA 475 15 has no effect on the direction of BYD Co i.e., BYD Co and IENOVA go up and down completely randomly.

Pair Corralation between BYD Co and IENOVA

Assuming the 90 days horizon BYD Co is expected to generate 4.24 times less return on investment than IENOVA. But when comparing it to its historical volatility, BYD Co Ltd is 3.19 times less risky than IENOVA. It trades about 0.09 of its potential returns per unit of risk. IENOVA 475 15 JAN 51 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,426  in IENOVA 475 15 JAN 51 on September 25, 2024 and sell it today you would earn a total of  199.00  from holding IENOVA 475 15 JAN 51 or generate 2.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	20.0%
Values	Daily Returns

BYD Co Ltd  vs.  IENOVA 475 15 JAN 51

BYD Co

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, BYD Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IENOVA 475 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IENOVA 475 15 JAN 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IENOVA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BYD Co and IENOVA

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

The idea behind BYD Co Ltd and IENOVA 475 15 JAN 51 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 Commodity Directory module to find actively traded commodities issued by global exchanges.