Correlation Between Bytes Technology and MultiChoice

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

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

Diversification Opportunities for Bytes Technology and MultiChoice

0.23

Correlation Coefficient

Bytes Technology  MultiChoice

Modest diversification

The 3 months correlation between Bytes and MultiChoice is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and MultiChoice Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MultiChoice Group 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 MultiChoice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MultiChoice Group has no effect on the direction of Bytes Technology i.e., Bytes Technology and MultiChoice go up and down completely randomly.

Pair Corralation between Bytes Technology and MultiChoice

Assuming the 90 days trading horizon Bytes Technology is expected to generate 1.32 times more return on investment than MultiChoice. However, Bytes Technology is 1.32 times more volatile than MultiChoice Group. It trades about 0.03 of its potential returns per unit of risk. MultiChoice Group is currently generating about 0.0 per unit of risk. If you would invest  770,429  in Bytes Technology on September 27, 2024 and sell it today you would earn a total of  208,371  from holding Bytes Technology or generate 27.05% return on investment over 90 days.

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

Bytes Technology  vs.  MultiChoice Group

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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MultiChoice Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bytes Technology and MultiChoice

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

The idea behind Bytes Technology and MultiChoice Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.