Correlation Between European Metals and Bytes Technology
Can any of the company-specific risk be diversified away by investing in both European Metals and Bytes Technology 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 European Metals and Bytes Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Bytes Technology, you can compare the effects of market volatilities on European Metals and Bytes Technology 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 European Metals with a short position of Bytes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Bytes Technology.
Diversification Opportunities for European Metals and Bytes Technology
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between European and Bytes is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and European Metals 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 European Metals Holdings are associated (or correlated) with Bytes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bytes Technology has no effect on the direction of European Metals i.e., European Metals and Bytes Technology go up and down completely randomly.
Pair Corralation between European Metals and Bytes Technology
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Bytes Technology. In addition to that, European Metals is 2.17 times more volatile than Bytes Technology. It trades about -0.09 of its total potential returns per unit of risk. Bytes Technology is currently generating about -0.04 per unit of volatility. If you would invest 57,187 in Bytes Technology on September 14, 2024 and sell it today you would lose (12,907) from holding Bytes Technology or give up 22.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Bytes Technology
Performance |
| Timeline |
| European Metals Holdings |
| Bytes Technology |
European Metals and Bytes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Bytes Technology
The main advantage of trading using opposite European Metals and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Bytes Technology 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 Bytes Technology will offset losses from the drop in Bytes Technology's long position.| European Metals vs. Made Tech Group | European Metals vs. Ecclesiastical Insurance Office | European Metals vs. Concurrent Technologies Plc | European Metals vs. Roper Technologies |
| Bytes Technology vs. bet at home AG | Bytes Technology vs. Naked Wines plc | Bytes Technology vs. Spirent Communications plc | Bytes Technology vs. Southwest Airlines 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |