Correlation Between Bytes Technology and Kap Industrial
Can any of the company-specific risk be diversified away by investing in both Bytes Technology and Kap Industrial 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 Kap Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bytes Technology and Kap Industrial Holdings, you can compare the effects of market volatilities on Bytes Technology and Kap Industrial 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 Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bytes Technology and Kap Industrial.
Diversification Opportunities for Bytes Technology and Kap Industrial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bytes and Kap is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings 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 Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of Bytes Technology i.e., Bytes Technology and Kap Industrial go up and down completely randomly.
Pair Corralation between Bytes Technology and Kap Industrial
Assuming the 90 days trading horizon Bytes Technology is expected to generate 1.05 times more return on investment than Kap Industrial. However, Bytes Technology is 1.05 times more volatile than Kap Industrial Holdings. It trades about -0.14 of its potential returns per unit of risk. Kap Industrial Holdings is currently generating about -0.22 per unit of risk. If you would invest 1,102,570 in Bytes Technology on August 28, 2024 and sell it today you would lose (66,670) from holding Bytes Technology or give up 6.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bytes Technology vs. Kap Industrial Holdings
Performance |
| Timeline |
| Bytes Technology |
| Kap Industrial Holdings |
Bytes Technology and Kap Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bytes Technology and Kap Industrial
The main advantage of trading using opposite Bytes Technology and Kap Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology position performs unexpectedly, Kap Industrial 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 Kap Industrial will offset losses from the drop in Kap Industrial's long position.| Bytes Technology vs. Master Drilling Group | Bytes Technology vs. Trematon Capital Investments | Bytes Technology vs. RCL Foods | Bytes Technology vs. Frontier Transport Holdings |
| Kap Industrial vs. ABSA Bank Limited | Kap Industrial vs. Astral Foods | Kap Industrial vs. Hosken Consolidated Investments | Kap Industrial vs. Trematon Capital Investments |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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