Correlation Between Bytes Technology and AfricaRhodium ETF

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

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

Diversification Opportunities for Bytes Technology and AfricaRhodium ETF

0.14

Correlation Coefficient

Bytes Technology  AfricaRhodium ETF

Average diversification

The 3 months correlation between Bytes and AfricaRhodium is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and AfricaRhodium ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfricaRhodium ETF and Bytes Technology 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 Bytes Technology are associated (or correlated) with AfricaRhodium ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfricaRhodium ETF has no effect on the direction of Bytes Technology i.e., Bytes Technology and AfricaRhodium ETF go up and down completely randomly.

Pair Corralation between Bytes Technology and AfricaRhodium ETF

Assuming the 90 days trading horizon Bytes Technology is expected to under-perform the AfricaRhodium ETF. But the stock apears to be less risky and, when comparing its historical volatility, Bytes Technology is 1.32 times less risky than AfricaRhodium ETF. The stock trades about -0.01 of its potential returns per unit of risk. The AfricaRhodium ETF is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,700,000  in AfricaRhodium ETF on September 3, 2024 and sell it today you would lose (133,000) from holding AfricaRhodium ETF or give up 1.73% of portfolio value over 90 days.

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

Bytes Technology  vs.  AfricaRhodium ETF

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.

AfricaRhodium ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AfricaRhodium ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AfricaRhodium ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bytes Technology and AfricaRhodium ETF

The main advantage of trading using opposite Bytes Technology and AfricaRhodium ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology position performs unexpectedly, AfricaRhodium ETF 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 AfricaRhodium ETF will offset losses from the drop in AfricaRhodium ETF's long position.

The idea behind Bytes Technology and AfricaRhodium ETF 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.