Correlation Between Fino Payments and Byke Hospitality

Can any of the company-specific risk be diversified away by investing in both Fino Payments and Byke Hospitality 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 Fino Payments and Byke Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fino Payments Bank and The Byke Hospitality, you can compare the effects of market volatilities on Fino Payments and Byke Hospitality 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 Fino Payments with a short position of Byke Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fino Payments and Byke Hospitality.

Diversification Opportunities for Fino Payments and Byke Hospitality

-0.3

Correlation Coefficient

Fino Payments  Byke Hospitality

Very good diversification

The 3 months correlation between Fino and Byke is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Fino Payments Bank and The Byke Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byke Hospitality and Fino Payments 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 Fino Payments Bank are associated (or correlated) with Byke Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byke Hospitality has no effect on the direction of Fino Payments i.e., Fino Payments and Byke Hospitality go up and down completely randomly.

Pair Corralation between Fino Payments and Byke Hospitality

Assuming the 90 days trading horizon Fino Payments Bank is expected to under-perform the Byke Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Fino Payments Bank is 1.21 times less risky than Byke Hospitality. The stock trades about -0.08 of its potential returns per unit of risk. The The Byke Hospitality is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,113  in The Byke Hospitality on September 12, 2024 and sell it today you would earn a total of  1,326  from holding The Byke Hospitality or generate 18.64% return on investment over 90 days.

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

Fino Payments Bank  vs.  The Byke Hospitality

Fino Payments Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fino Payments Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Byke Hospitality

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Byke Hospitality are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Byke Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fino Payments and Byke Hospitality

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

The idea behind Fino Payments Bank and The Byke Hospitality 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.