Correlation Between Bytes Technology and Sabvest Capital

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

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

Diversification Opportunities for Bytes Technology and Sabvest Capital

-0.52

Correlation Coefficient

Bytes Technology  Sabvest Capital

Excellent diversification

The 3 months correlation between Bytes and Sabvest is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Sabvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabvest Capital 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 Sabvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabvest Capital has no effect on the direction of Bytes Technology i.e., Bytes Technology and Sabvest Capital go up and down completely randomly.

Pair Corralation between Bytes Technology and Sabvest Capital

Assuming the 90 days trading horizon Bytes Technology is expected to generate 0.78 times more return on investment than Sabvest Capital. However, Bytes Technology is 1.28 times less risky than Sabvest Capital. It trades about -0.1 of its potential returns per unit of risk. Sabvest Capital is currently generating about -0.16 per unit of risk. If you would invest  1,047,900  in Bytes Technology on October 8, 2024 and sell it today you would lose (34,500) from holding Bytes Technology or give up 3.29% of portfolio value over 90 days.

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

Bytes Technology  vs.  Sabvest Capital

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sabvest Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sabvest Capital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabvest Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bytes Technology and Sabvest Capital

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

The idea behind Bytes Technology and Sabvest Capital 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.