Correlation Between Bytes Technology and Gold Fields
Can any of the company-specific risk be diversified away by investing in both Bytes Technology and Gold Fields 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 Gold Fields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bytes Technology and Gold Fields, you can compare the effects of market volatilities on Bytes Technology and Gold Fields 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 Gold Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bytes Technology and Gold Fields.
Diversification Opportunities for Bytes Technology and Gold Fields
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bytes and Gold is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Gold Fields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields 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 Gold Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Fields has no effect on the direction of Bytes Technology i.e., Bytes Technology and Gold Fields go up and down completely randomly.
Pair Corralation between Bytes Technology and Gold Fields
Assuming the 90 days trading horizon Bytes Technology is expected to generate 4.53 times less return on investment than Gold Fields. But when comparing it to its historical volatility, Bytes Technology is 1.41 times less risky than Gold Fields. It trades about 0.11 of its potential returns per unit of risk. Gold Fields is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 2,477,000 in Gold Fields on October 23, 2024 and sell it today you would earn a total of 399,900 from holding Gold Fields or generate 16.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bytes Technology vs. Gold Fields
Performance |
| Timeline |
| Bytes Technology |
| Gold Fields |
Bytes Technology and Gold Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bytes Technology and Gold Fields
The main advantage of trading using opposite Bytes Technology and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology position performs unexpectedly, Gold Fields 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 Gold Fields will offset losses from the drop in Gold Fields' long position.| Bytes Technology vs. HomeChoice Investments | Bytes Technology vs. Capitec Bank Holdings | Bytes Technology vs. Reinet Investments SCA | Bytes Technology vs. Astoria Investments |
| Gold Fields vs. E Media Holdings | Gold Fields vs. Kumba Iron Ore | Gold Fields vs. Brimstone Investment | Gold Fields vs. Bytes Technology |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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