Correlation Between Ashtead Technology and Bytes Technology

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

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

Diversification Opportunities for Ashtead Technology and Bytes Technology

0.69

Correlation Coefficient

Ashtead Technology  Bytes Technology

Poor diversification

The 3 months correlation between Ashtead and Bytes is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Ashtead 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 Ashtead Technology 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 Ashtead Technology i.e., Ashtead Technology and Bytes Technology go up and down completely randomly.

Pair Corralation between Ashtead Technology and Bytes Technology

Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to generate 1.41 times more return on investment than Bytes Technology. However, Ashtead Technology is 1.41 times more volatile than Bytes Technology. It trades about -0.01 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.16 per unit of risk. If you would invest  55,800  in Ashtead Technology Holdings on September 26, 2024 and sell it today you would lose (1,800) from holding Ashtead Technology Holdings or give up 3.23% of portfolio value over 90 days.

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

Ashtead Technology Holdings  vs.  Bytes Technology

Ashtead Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashtead Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ashtead Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Ashtead Technology and Bytes Technology

The main advantage of trading using opposite Ashtead Technology and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Technology 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 Ashtead Technology Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.