Correlation Between Agro Tech and Byke Hospitality

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

By analyzing existing cross correlation between Agro Tech Foods and The Byke Hospitality, you can compare the effects of market volatilities on Agro Tech and Byke Hospitality 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 Agro Tech with a short position of Byke Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and Byke Hospitality.

Diversification Opportunities for Agro Tech and Byke Hospitality

0.07

Correlation Coefficient

Agro Tech  Byke Hospitality

Significant diversification

The 3 months correlation between Agro and Byke is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and The Byke Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byke Hospitality and Agro Tech 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 Agro Tech Foods are associated (or correlated) with Byke Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byke Hospitality has no effect on the direction of Agro Tech i.e., Agro Tech and Byke Hospitality go up and down completely randomly.

Pair Corralation between Agro Tech and Byke Hospitality

Assuming the 90 days trading horizon Agro Tech Foods is expected to under-perform the Byke Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Agro Tech Foods is 1.44 times less risky than Byke Hospitality. The stock trades about -0.09 of its potential returns per unit of risk. The The Byke Hospitality is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  8,439  in The Byke Hospitality on October 11, 2024 and sell it today you would earn a total of  967.00  from holding The Byke Hospitality or generate 11.46% return on investment over 90 days.

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

Agro Tech Foods  vs.  The Byke Hospitality

Agro Tech Foods

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Agro Tech Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Agro Tech is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Byke Hospitality

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Byke Hospitality are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Byke Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agro Tech and Byke Hospitality

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

The idea behind Agro Tech Foods and The Byke Hospitality 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.