Correlation Between Bytes Technology and Eastern Platinum
Can any of the company-specific risk be diversified away by investing in both Bytes Technology and Eastern Platinum 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 Eastern Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bytes Technology and Eastern Platinum Limited, you can compare the effects of market volatilities on Bytes Technology and Eastern Platinum 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 Eastern Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bytes Technology and Eastern Platinum.
Diversification Opportunities for Bytes Technology and Eastern Platinum
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bytes and Eastern is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Eastern Platinum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Platinum 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 Eastern Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Platinum has no effect on the direction of Bytes Technology i.e., Bytes Technology and Eastern Platinum go up and down completely randomly.
Pair Corralation between Bytes Technology and Eastern Platinum
Assuming the 90 days trading horizon Bytes Technology is expected to generate 42.97 times less return on investment than Eastern Platinum. But when comparing it to its historical volatility, Bytes Technology is 22.2 times less risky than Eastern Platinum. It trades about 0.03 of its potential returns per unit of risk. Eastern Platinum Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 33,100 in Eastern Platinum Limited on September 2, 2024 and sell it today you would lose (17,100) from holding Eastern Platinum Limited or give up 51.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bytes Technology vs. Eastern Platinum Limited
Performance |
| Timeline |
| Bytes Technology |
| Eastern Platinum |
Bytes Technology and Eastern Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bytes Technology and Eastern Platinum
The main advantage of trading using opposite Bytes Technology and Eastern Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology position performs unexpectedly, Eastern Platinum 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 Eastern Platinum will offset losses from the drop in Eastern Platinum's long position.| Bytes Technology vs. Sasol Ltd Bee | Bytes Technology vs. Growthpoint Properties | Bytes Technology vs. AfricaRhodium ETF | Bytes Technology vs. CoreShares Preference Share |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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