Correlation Between Bytes Technology and General Motors

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

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

Diversification Opportunities for Bytes Technology and General Motors

-0.48

Correlation Coefficient

Bytes Technology  General Motors

Very good diversification

The 3 months correlation between Bytes and General is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and General Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors 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 General Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Bytes Technology i.e., Bytes Technology and General Motors go up and down completely randomly.

Pair Corralation between Bytes Technology and General Motors

Assuming the 90 days trading horizon Bytes Technology is expected to under-perform the General Motors. But the stock apears to be less risky and, when comparing its historical volatility, Bytes Technology is 1.37 times less risky than General Motors. The stock trades about -0.27 of its potential returns per unit of risk. The General Motors Co is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  5,315  in General Motors Co on October 11, 2024 and sell it today you would lose (240.00) from holding General Motors Co or give up 4.52% 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.  General Motors Co

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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

General Motors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, General Motors may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bytes Technology and General Motors

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

The idea behind Bytes Technology and General Motors Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.