Correlation Between Brimstone Investment and Bytes Technology

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

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

Diversification Opportunities for Brimstone Investment and Bytes Technology

0.33

Correlation Coefficient

Brimstone Investment  Bytes Technology

Weak diversification

The 3 months correlation between Brimstone and Bytes is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Brimstone Investment and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Brimstone Investment 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 Brimstone Investment 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 Brimstone Investment i.e., Brimstone Investment and Bytes Technology go up and down completely randomly.

Pair Corralation between Brimstone Investment and Bytes Technology

Assuming the 90 days trading horizon Brimstone Investment is expected to generate 1.89 times more return on investment than Bytes Technology. However, Brimstone Investment is 1.89 times more volatile than Bytes Technology. It trades about 0.04 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.01 per unit of risk. If you would invest  55,000  in Brimstone Investment on September 3, 2024 and sell it today you would earn a total of  2,400  from holding Brimstone Investment or generate 4.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brimstone Investment  vs.  Bytes Technology

Brimstone Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brimstone Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brimstone Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 rather sound technical and fundamental indicators, Bytes Technology is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Brimstone Investment and Bytes Technology

The main advantage of trading using opposite Brimstone Investment and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brimstone Investment 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 Brimstone Investment 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.