Correlation Between Shoprite Holdings and Bytes Technology
Can any of the company-specific risk be diversified away by investing in both Shoprite Holdings 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 Shoprite Holdings and Bytes Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoprite Holdings and Bytes Technology, you can compare the effects of market volatilities on Shoprite Holdings 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 Shoprite Holdings with a short position of Bytes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoprite Holdings and Bytes Technology.
Diversification Opportunities for Shoprite Holdings and Bytes Technology
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shoprite and Bytes is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Shoprite Holdings 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 Shoprite 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 Shoprite Holdings i.e., Shoprite Holdings and Bytes Technology go up and down completely randomly.
Pair Corralation between Shoprite Holdings and Bytes Technology
Assuming the 90 days trading horizon Shoprite Holdings is expected to generate 0.77 times more return on investment than Bytes Technology. However, Shoprite Holdings is 1.31 times less risky than Bytes Technology. It trades about 0.22 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.19 per unit of risk. If you would invest 2,823,900 in Shoprite Holdings on August 24, 2024 and sell it today you would earn a total of 227,100 from holding Shoprite Holdings or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoprite Holdings vs. Bytes Technology
Performance |
| Timeline |
| Shoprite Holdings |
| Bytes Technology |
Shoprite Holdings and Bytes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoprite Holdings and Bytes Technology
The main advantage of trading using opposite Shoprite Holdings and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoprite Holdings 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.| Shoprite Holdings vs. Capitec Bank Holdings | Shoprite Holdings vs. ABSA Bank Limited | Shoprite Holdings vs. Frontier Transport Holdings | Shoprite Holdings vs. Advtech |
| Bytes Technology vs. Centaur Bci Balanced | Bytes Technology vs. Growthpoint Properties | Bytes Technology vs. Bowler Metcalf | Bytes Technology vs. Shoprite Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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