Correlation Between L Catterton and BYTE Acquisition

Can any of the company-specific risk be diversified away by investing in both L Catterton and BYTE Acquisition 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 L Catterton and BYTE Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between L Catterton Asia and BYTE Acquisition Corp, you can compare the effects of market volatilities on L Catterton and BYTE Acquisition 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 L Catterton with a short position of BYTE Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Catterton and BYTE Acquisition.

Diversification Opportunities for L Catterton and BYTE Acquisition

0.43

Correlation Coefficient

L Catterton  BYTE Acquisition

Very weak diversification

The 3 months correlation between LCAAU and BYTE is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding L Catterton Asia and BYTE Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYTE Acquisition Corp and L Catterton 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 L Catterton Asia are associated (or correlated) with BYTE Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYTE Acquisition Corp has no effect on the direction of L Catterton i.e., L Catterton and BYTE Acquisition go up and down completely randomly.

Pair Corralation between L Catterton and BYTE Acquisition

If you would invest  1,076  in BYTE Acquisition Corp on September 19, 2024 and sell it today you would earn a total of  0.00  from holding BYTE Acquisition Corp or generate 0.0% return on investment over 90 days.

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

L Catterton Asia  vs.  BYTE Acquisition Corp

L Catterton Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L Catterton Asia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, L Catterton is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BYTE Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BYTE Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BYTE Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with L Catterton and BYTE Acquisition

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

The idea behind L Catterton Asia and BYTE Acquisition Corp 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.