Correlation Between Dentsply Sirona and Bytes Technology

Can any of the company-specific risk be diversified away by investing in both Dentsply Sirona 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 Dentsply Sirona and Bytes Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dentsply Sirona and Bytes Technology, you can compare the effects of market volatilities on Dentsply Sirona 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 Dentsply Sirona with a short position of Bytes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dentsply Sirona and Bytes Technology.

Diversification Opportunities for Dentsply Sirona and Bytes Technology

0.81

Correlation Coefficient

Dentsply Sirona  Bytes Technology

Very poor diversification

The 3 months correlation between Dentsply and Bytes is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Dentsply Sirona 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 Dentsply Sirona 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 Dentsply Sirona i.e., Dentsply Sirona and Bytes Technology go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Bytes Technology

Assuming the 90 days trading horizon Dentsply Sirona is expected to under-perform the Bytes Technology. In addition to that, Dentsply Sirona is 2.06 times more volatile than Bytes Technology. It trades about -0.12 of its total potential returns per unit of risk. Bytes Technology is currently generating about -0.15 per unit of volatility. If you would invest  51,440  in Bytes Technology on September 21, 2024 and sell it today you would lose (8,880) from holding Bytes Technology or give up 17.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.88%
Values	Daily Returns

Dentsply Sirona  vs.  Bytes Technology

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bytes Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bytes Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dentsply Sirona and Bytes Technology

The main advantage of trading using opposite Dentsply Sirona and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dentsply Sirona 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.

The idea behind Dentsply Sirona and Bytes Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.