Correlation Between BYD Co and XIAOMI

Can any of the company-specific risk be diversified away by investing in both BYD Co and XIAOMI 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 XIAOMI 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 XIAOMI 3375 29 APR 30, you can compare the effects of market volatilities on BYD Co and XIAOMI 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 XIAOMI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and XIAOMI.

Diversification Opportunities for BYD Co and XIAOMI

-0.39

Correlation Coefficient

BYD Co  XIAOMI

Very good diversification

The 3 months correlation between BYD and XIAOMI is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and XIAOMI 3375 29 APR 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAOMI 3375 29 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 XIAOMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAOMI 3375 29 has no effect on the direction of BYD Co i.e., BYD Co and XIAOMI go up and down completely randomly.

Pair Corralation between BYD Co and XIAOMI

Assuming the 90 days horizon BYD Co Ltd is expected to generate 0.53 times more return on investment than XIAOMI. However, BYD Co Ltd is 1.9 times less risky than XIAOMI. It trades about 0.09 of its potential returns per unit of risk. XIAOMI 3375 29 APR 30 is currently generating about -0.46 per unit of risk. If you would invest  6,666  in BYD Co Ltd on September 26, 2024 and sell it today you would earn a total of  267.00  from holding BYD Co Ltd or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	23.81%
Values	Daily Returns

BYD Co Ltd  vs.  XIAOMI 3375 29 APR 30

BYD Co

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, BYD Co is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

XIAOMI 3375 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XIAOMI 3375 29 APR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for XIAOMI 3375 29 APR 30 investors.

Pair Trading with BYD Co and XIAOMI

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

The idea behind BYD Co Ltd and XIAOMI 3375 29 APR 30 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.