Correlation Between Bytes Technology and Admiral Group
Can any of the company-specific risk be diversified away by investing in both Bytes Technology and Admiral Group 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 Admiral Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bytes Technology and Admiral Group PLC, you can compare the effects of market volatilities on Bytes Technology and Admiral Group 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 Admiral Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bytes Technology and Admiral Group.
Diversification Opportunities for Bytes Technology and Admiral Group
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bytes and Admiral is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Admiral Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admiral Group PLC 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 Admiral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admiral Group PLC has no effect on the direction of Bytes Technology i.e., Bytes Technology and Admiral Group go up and down completely randomly.
Pair Corralation between Bytes Technology and Admiral Group
Assuming the 90 days trading horizon Bytes Technology is expected to generate 1.97 times more return on investment than Admiral Group. However, Bytes Technology is 1.97 times more volatile than Admiral Group PLC. It trades about -0.12 of its potential returns per unit of risk. Admiral Group PLC is currently generating about -0.24 per unit of risk. If you would invest 51,142 in Bytes Technology on August 30, 2024 and sell it today you would lose (6,142) from holding Bytes Technology or give up 12.01% 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. Admiral Group PLC
Performance |
| Timeline |
| Bytes Technology |
| Admiral Group PLC |
Bytes Technology and Admiral Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bytes Technology and Admiral Group
The main advantage of trading using opposite Bytes Technology and Admiral Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology position performs unexpectedly, Admiral Group 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 Admiral Group will offset losses from the drop in Admiral Group's long position.| Bytes Technology vs. Samsung Electronics Co | Bytes Technology vs. Samsung Electronics Co | Bytes Technology vs. Hyundai Motor | Bytes Technology vs. Toyota Motor Corp |
| Admiral Group vs. Albion Technology General | Admiral Group vs. Bytes Technology | Admiral Group vs. Ashtead Technology Holdings | Admiral Group vs. DXC Technology Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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