Risk of New Energy Investment: A Case Study of BYD

Abstract

Amid diminishing traditional energy sources and escalating environmental challenges, the new energy sector flourishes, presenting numerous investment avenues. However, increased opportunities are often synonymous with heightened risks, necessitating protective measures for investors through robust risk identification and mitigation. This paper leverages the Capital Asset Pricing Model (CAPM), a revered financial analysis instrument, to study investment risks in the emerging new energy realm, spotlighting China's BYD. Employing a decade's SZSC index data and China's risk-free interest rate, the research evaluates BYD's investment landscape across varying phases, notably during the COVID-19 era, and contrasts it with contemporaries like XPENG, NIO, and others. The findings aim to discern the new energy sector's risk portfolio, culminating in actionable insights for prospective investors.