Correlation Between African Media and Bytes Technology
Can any of the company-specific risk be diversified away by investing in both African Media 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 African Media and Bytes Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Media Entertainment and Bytes Technology, you can compare the effects of market volatilities on African Media 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 African Media with a short position of Bytes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Bytes Technology.
Diversification Opportunities for African Media and Bytes Technology
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between African and Bytes is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and African Media 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 African Media Entertainment 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 African Media i.e., African Media and Bytes Technology go up and down completely randomly.
Pair Corralation between African Media and Bytes Technology
Assuming the 90 days trading horizon African Media Entertainment is expected to under-perform the Bytes Technology. But the stock apears to be less risky and, when comparing its historical volatility, African Media Entertainment is 7.65 times less risky than Bytes Technology. The stock trades about -0.32 of its potential returns per unit of risk. The Bytes Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,013,400 in Bytes Technology on November 5, 2024 and sell it today you would earn a total of 53,400 from holding Bytes Technology or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
African Media Entertainment vs. Bytes Technology
Performance |
| Timeline |
| African Media Entert |
| Bytes Technology |
African Media and Bytes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Bytes Technology
The main advantage of trading using opposite African Media and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media 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.| African Media vs. Safari Investments RSA | African Media vs. Boxer Retail | African Media vs. Lesaka Technologies | African Media vs. Harmony Gold Mining |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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