Correlation Between Air Products and Bytes Technology
Can any of the company-specific risk be diversified away by investing in both Air Products and Bytes Technology 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 Air Products and Bytes Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products Chemicals and Bytes Technology, you can compare the effects of market volatilities on Air Products and Bytes Technology 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 Air Products with a short position of Bytes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Bytes Technology.
Diversification Opportunities for Air Products and Bytes Technology
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Bytes is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Air Products 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 Air Products Chemicals are associated (or correlated) with Bytes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bytes Technology has no effect on the direction of Air Products i.e., Air Products and Bytes Technology go up and down completely randomly.
Pair Corralation between Air Products and Bytes Technology
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 4.08 times more return on investment than Bytes Technology. However, Air Products is 4.08 times more volatile than Bytes Technology. It trades about 0.05 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.01 per unit of risk. If you would invest 23,345 in Air Products Chemicals on November 7, 2024 and sell it today you would earn a total of 10,668 from holding Air Products Chemicals or generate 45.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.58% |
| Values | Daily Returns |
Air Products Chemicals vs. Bytes Technology
Performance |
| Timeline |
| Air Products Chemicals |
| Bytes Technology |
Air Products and Bytes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Bytes Technology
The main advantage of trading using opposite Air Products and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Bytes Technology 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 Bytes Technology will offset losses from the drop in Bytes Technology's long position.| Air Products vs. Pets at Home | Air Products vs. American Homes 4 | Air Products vs. Commerzbank AG | Air Products vs. MoneysupermarketCom Group PLC |
| Bytes Technology vs. Jacquet Metal Service | Bytes Technology vs. Wheaton Precious Metals | Bytes Technology vs. Grand Vision Media | Bytes Technology vs. JD Sports Fashion |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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