Correlation Between BYD Co and AYRO

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

Diversification Opportunities for BYD Co and AYRO

-0.55

Correlation Coefficient

BYD Co  AYRO

Excellent diversification

The 3 months correlation between BYD and AYRO is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co Ltd and AYRO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AYRO Inc 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 AYRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AYRO Inc has no effect on the direction of BYD Co i.e., BYD Co and AYRO go up and down completely randomly.

Pair Corralation between BYD Co and AYRO

Assuming the 90 days horizon BYD Co Ltd is expected to generate 0.55 times more return on investment than AYRO. However, BYD Co Ltd is 1.82 times less risky than AYRO. It trades about 0.2 of its potential returns per unit of risk. AYRO Inc is currently generating about -0.26 per unit of risk. If you would invest  5,179  in BYD Co Ltd on January 31, 2024 and sell it today you would earn a total of  356.00  from holding BYD Co Ltd or generate 6.87% return on investment over 90 days.

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

BYD Co Ltd  vs.  AYRO Inc

BYD Co

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Co Ltd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, BYD Co showed solid returns over the last few months and may actually be approaching a breakup point.

AYRO Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AYRO Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BYD Co and AYRO

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

The idea behind BYD Co Ltd and AYRO Inc 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 Stocks Directory module to find actively traded stocks across global markets.