Correlation Between Hilton Food and Bytes Technology
Can any of the company-specific risk be diversified away by investing in both Hilton Food 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 Hilton Food and Bytes Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Food Group and Bytes Technology, you can compare the effects of market volatilities on Hilton Food 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 Hilton Food with a short position of Bytes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Bytes Technology.
Diversification Opportunities for Hilton Food and Bytes Technology
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hilton and Bytes is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Hilton Food 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 Hilton Food Group 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 Hilton Food i.e., Hilton Food and Bytes Technology go up and down completely randomly.
Pair Corralation between Hilton Food and Bytes Technology
Assuming the 90 days trading horizon Hilton Food Group is expected to generate 0.71 times more return on investment than Bytes Technology. However, Hilton Food Group is 1.41 times less risky than Bytes Technology. It trades about 0.03 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.16 per unit of risk. If you would invest 88,857 in Hilton Food Group on September 26, 2024 and sell it today you would earn a total of 1,543 from holding Hilton Food Group or generate 1.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hilton Food Group vs. Bytes Technology
Performance |
Timeline |
Hilton Food Group |
Bytes Technology |
Hilton Food and Bytes Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hilton Food and Bytes Technology
The main advantage of trading using opposite Hilton Food and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food 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.Hilton Food vs. Uniper SE | Hilton Food vs. Mulberry Group PLC | Hilton Food vs. London Security Plc | Hilton Food vs. Triad Group PLC |
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Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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