Correlation Between Bytes Technology and Pick N

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

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

Diversification Opportunities for Bytes Technology and Pick N

-0.42

Correlation Coefficient

Bytes Technology  Pick N

Very good diversification

The 3 months correlation between Bytes and Pick is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Pick N Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick N Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick N Pay has no effect on the direction of Bytes Technology i.e., Bytes Technology and Pick N go up and down completely randomly.

Pair Corralation between Bytes Technology and Pick N

Assuming the 90 days trading horizon Bytes Technology is expected to generate 0.98 times more return on investment than Pick N. However, Bytes Technology is 1.02 times less risky than Pick N. It trades about 0.03 of its potential returns per unit of risk. Pick N Pay is currently generating about -0.02 per unit of risk. If you would invest  827,951  in Bytes Technology on October 23, 2024 and sell it today you would earn a total of  168,949  from holding Bytes Technology or generate 20.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Bytes Technology  vs.  Pick N Pay

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pick N Pay

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pick N Pay are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Pick N exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bytes Technology and Pick N

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

The idea behind Bytes Technology and Pick N Pay 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.