Correlation Between Bytes Technology and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Bytes Technology and Thungela Resources 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 Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bytes Technology and Thungela Resources Limited, you can compare the effects of market volatilities on Bytes Technology and Thungela Resources 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 Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bytes Technology and Thungela Resources.
Diversification Opportunities for Bytes Technology and Thungela Resources
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bytes and Thungela is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources 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 Thungela Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thungela Resources has no effect on the direction of Bytes Technology i.e., Bytes Technology and Thungela Resources go up and down completely randomly.
Pair Corralation between Bytes Technology and Thungela Resources
Assuming the 90 days trading horizon Bytes Technology is expected to generate 1.77 times less return on investment than Thungela Resources. But when comparing it to its historical volatility, Bytes Technology is 1.65 times less risky than Thungela Resources. It trades about 0.03 of its potential returns per unit of risk. Thungela Resources Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 55,400 in Thungela Resources Limited on September 1, 2024 and sell it today you would earn a total of 700.00 from holding Thungela Resources Limited or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bytes Technology vs. Thungela Resources Limited
Performance |
| Timeline |
| Bytes Technology |
| Thungela Resources |
Bytes Technology and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bytes Technology and Thungela Resources
The main advantage of trading using opposite Bytes Technology and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology position performs unexpectedly, Thungela Resources 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 Thungela Resources will offset losses from the drop in Thungela Resources' long position.| Bytes Technology vs. National Atomic Co | Bytes Technology vs. Flutter Entertainment PLC | Bytes Technology vs. Games Workshop Group | Bytes Technology vs. Judges Scientific Plc |
| Thungela Resources vs. Fair Oaks Income | Thungela Resources vs. Zanaga Iron Ore | Thungela Resources vs. Veolia Environnement VE | Thungela Resources vs. Baker Steel Resources |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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