Correlation Between Bytes Technology and Sebata Holdings

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

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

Diversification Opportunities for Bytes Technology and Sebata Holdings

0.53

Correlation Coefficient

Bytes Technology  Sebata Holdings

Very weak diversification

The 3 months correlation between Bytes and Sebata is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Sebata Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sebata Holdings 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 Sebata Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sebata Holdings has no effect on the direction of Bytes Technology i.e., Bytes Technology and Sebata Holdings go up and down completely randomly.

Pair Corralation between Bytes Technology and Sebata Holdings

Assuming the 90 days trading horizon Bytes Technology is expected to under-perform the Sebata Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Bytes Technology is 2.36 times less risky than Sebata Holdings. The stock trades about -0.29 of its potential returns per unit of risk. The Sebata Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,500  in Sebata Holdings on September 25, 2024 and sell it today you would earn a total of  300.00  from holding Sebata Holdings or generate 3.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Bytes Technology  vs.  Sebata Holdings

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.

Sebata Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sebata Holdings 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.

Pair Trading with Bytes Technology and Sebata Holdings

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

The idea behind Bytes Technology and Sebata Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.