Correlation Between Skillful Craftsman and BYD Co

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

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

Diversification Opportunities for Skillful Craftsman and BYD Co

-0.08

Correlation Coefficient

Skillful Craftsman  BYD Co

Good diversification

The 3 months correlation between Skillful and BYD is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Skillful Craftsman Education and BYD Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and Skillful Craftsman 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 Skillful Craftsman Education are associated (or correlated) with BYD Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of Skillful Craftsman i.e., Skillful Craftsman and BYD Co go up and down completely randomly.

Pair Corralation between Skillful Craftsman and BYD Co

Given the investment horizon of 90 days Skillful Craftsman Education is expected to under-perform the BYD Co. In addition to that, Skillful Craftsman is 1.77 times more volatile than BYD Co Ltd. It trades about -0.03 of its total potential returns per unit of risk. BYD Co Ltd is currently generating about 0.04 per unit of volatility. If you would invest  6,763  in BYD Co Ltd on September 22, 2024 and sell it today you would earn a total of  106.00  from holding BYD Co Ltd or generate 1.57% return on investment over 90 days.

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

Skillful Craftsman Education  vs.  BYD Co Ltd

Skillful Craftsman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skillful Craftsman Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Skillful Craftsman is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

BYD Co

Risk-Adjusted Performance

5 of 100

Insignificant

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 fragile fundamental indicators, BYD Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Skillful Craftsman and BYD Co

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

The idea behind Skillful Craftsman Education and BYD Co Ltd 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..