Correlation Between GlobalData PLC and Bytes Technology

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

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

Diversification Opportunities for GlobalData PLC and Bytes Technology

0.24

Correlation Coefficient

GlobalData PLC  Bytes Technology

Modest diversification

The 3 months correlation between GlobalData and Bytes is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding GlobalData PLC and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and GlobalData PLC 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 GlobalData PLC are associated (or correlated) with Bytes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bytes Technology has no effect on the direction of GlobalData PLC i.e., GlobalData PLC and Bytes Technology go up and down completely randomly.

Pair Corralation between GlobalData PLC and Bytes Technology

Assuming the 90 days trading horizon GlobalData PLC is expected to generate 1.05 times more return on investment than Bytes Technology. However, GlobalData PLC is 1.05 times more volatile than Bytes Technology. It trades about -0.08 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.15 per unit of risk. If you would invest  20,700  in GlobalData PLC on September 29, 2024 and sell it today you would lose (2,200) from holding GlobalData PLC or give up 10.63% of portfolio value over 90 days.

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

GlobalData PLC  vs.  Bytes Technology

GlobalData PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlobalData PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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

Pair Trading with GlobalData PLC and Bytes Technology

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

The idea behind GlobalData PLC and Bytes Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.