Correlation Between Redefine Properties and Bytes Technology

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

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

Diversification Opportunities for Redefine Properties and Bytes Technology

0.75

Correlation Coefficient

Redefine Properties  Bytes Technology

Poor diversification

The 3 months correlation between Redefine and Bytes is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Redefine Properties and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Redefine Properties 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 Redefine Properties 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 Redefine Properties i.e., Redefine Properties and Bytes Technology go up and down completely randomly.

Pair Corralation between Redefine Properties and Bytes Technology

Assuming the 90 days trading horizon Redefine Properties is expected to generate 0.78 times more return on investment than Bytes Technology. However, Redefine Properties is 1.28 times less risky than Bytes Technology. It trades about -0.12 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.11 per unit of risk. If you would invest  50,800  in Redefine Properties on October 11, 2024 and sell it today you would lose (5,100) from holding Redefine Properties or give up 10.04% of portfolio value over 90 days.

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

Redefine Properties  vs.  Bytes Technology

Redefine Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redefine Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Redefine Properties and Bytes Technology

The main advantage of trading using opposite Redefine Properties and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redefine Properties 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 Redefine Properties 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .