Correlation Between Bytes Technology and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Bytes Technology and Standard Bank 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 Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bytes Technology and Standard Bank Group, you can compare the effects of market volatilities on Bytes Technology and Standard Bank 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 Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bytes Technology and Standard Bank.
Diversification Opportunities for Bytes Technology and Standard Bank
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bytes and Standard is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Bytes Technology i.e., Bytes Technology and Standard Bank go up and down completely randomly.
Pair Corralation between Bytes Technology and Standard Bank
Assuming the 90 days trading horizon Bytes Technology is expected to generate 1.32 times more return on investment than Standard Bank. However, Bytes Technology is 1.32 times more volatile than Standard Bank Group. It trades about -0.16 of its potential returns per unit of risk. Standard Bank Group is currently generating about -0.23 per unit of risk. If you would invest 1,059,900 in Bytes Technology on September 14, 2024 and sell it today you would lose (52,800) from holding Bytes Technology or give up 4.98% 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. Standard Bank Group
Performance |
| Timeline |
| Bytes Technology |
| Standard Bank Group |
Bytes Technology and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bytes Technology and Standard Bank
The main advantage of trading using opposite Bytes Technology and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology position performs unexpectedly, Standard Bank 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 Standard Bank will offset losses from the drop in Standard Bank's long position.| Bytes Technology vs. HomeChoice Investments | Bytes Technology vs. Harmony Gold Mining | Bytes Technology vs. Copper 360 | Bytes Technology vs. MC Mining |
| Standard Bank vs. MC Mining | Standard Bank vs. Bytes Technology | Standard Bank vs. Standard Bank Group | Standard Bank vs. We Buy Cars |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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