Correlation Between Bytes Technology and City Lodge
Can any of the company-specific risk be diversified away by investing in both Bytes Technology and City Lodge 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 Bytes Technology and City Lodge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bytes Technology and City Lodge Hotels, you can compare the effects of market volatilities on Bytes Technology and City Lodge 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 Bytes Technology with a short position of City Lodge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bytes Technology and City Lodge.
Diversification Opportunities for Bytes Technology and City Lodge
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bytes and City is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and City Lodge Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Lodge Hotels and Bytes Technology 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 Bytes Technology are associated (or correlated) with City Lodge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Lodge Hotels has no effect on the direction of Bytes Technology i.e., Bytes Technology and City Lodge go up and down completely randomly.
Pair Corralation between Bytes Technology and City Lodge
Assuming the 90 days trading horizon Bytes Technology is expected to under-perform the City Lodge. In addition to that, Bytes Technology is 1.33 times more volatile than City Lodge Hotels. It trades about -0.03 of its total potential returns per unit of risk. City Lodge Hotels is currently generating about 0.0 per unit of volatility. If you would invest 47,900 in City Lodge Hotels on October 21, 2024 and sell it today you would lose (2,900) from holding City Lodge Hotels or give up 6.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bytes Technology vs. City Lodge Hotels
Performance |
| Timeline |
| Bytes Technology |
| City Lodge Hotels |
Bytes Technology and City Lodge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bytes Technology and City Lodge
The main advantage of trading using opposite Bytes Technology and City Lodge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology position performs unexpectedly, City Lodge 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 City Lodge will offset losses from the drop in City Lodge's long position.| Bytes Technology vs. HomeChoice Investments | Bytes Technology vs. Advtech | Bytes Technology vs. Frontier Transport Holdings | Bytes Technology vs. ABSA Bank Limited |
| City Lodge vs. MC Mining | City Lodge vs. Bytes Technology | City Lodge vs. Advtech | City Lodge vs. ABSA Bank Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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