Correlation Between Kap Industrial and Bytes Technology
Can any of the company-specific risk be diversified away by investing in both Kap Industrial 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 Kap Industrial and Bytes Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kap Industrial Holdings and Bytes Technology, you can compare the effects of market volatilities on Kap Industrial 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 Kap Industrial with a short position of Bytes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Bytes Technology.
Diversification Opportunities for Kap Industrial and Bytes Technology
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kap and Bytes is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Kap Industrial 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 Kap Industrial 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 Kap Industrial i.e., Kap Industrial and Bytes Technology go up and down completely randomly.
Pair Corralation between Kap Industrial and Bytes Technology
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Bytes Technology. In addition to that, Kap Industrial is 1.42 times more volatile than Bytes Technology. It trades about -0.14 of its total potential returns per unit of risk. Bytes Technology is currently generating about 0.22 per unit of volatility. If you would invest 986,900 in Bytes Technology on November 3, 2024 and sell it today you would earn a total of 79,900 from holding Bytes Technology or generate 8.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kap Industrial Holdings vs. Bytes Technology
Performance |
| Timeline |
| Kap Industrial Holdings |
| Bytes Technology |
Kap Industrial and Bytes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and Bytes Technology
The main advantage of trading using opposite Kap Industrial and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial 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.| Kap Industrial vs. Mantengu Mining | Kap Industrial vs. CA Sales Holdings | Kap Industrial vs. RCL Foods | Kap Industrial vs. Standard Bank Group |
| Bytes Technology vs. Boxer Retail | Bytes Technology vs. MC Mining | Bytes Technology vs. Hosken Consolidated Investments | Bytes Technology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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