Correlation Between Trematon Capital and Bytes Technology

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

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

Diversification Opportunities for Trematon Capital and Bytes Technology

-0.55

Correlation Coefficient

Trematon Capital  Bytes Technology

Excellent diversification

The 3 months correlation between Trematon and Bytes is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Trematon Capital 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 Trematon Capital Investments 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 Trematon Capital i.e., Trematon Capital and Bytes Technology go up and down completely randomly.

Pair Corralation between Trematon Capital and Bytes Technology

Assuming the 90 days trading horizon Trematon Capital Investments is expected to under-perform the Bytes Technology. In addition to that, Trematon Capital is 1.06 times more volatile than Bytes Technology. It trades about -0.06 of its total potential returns per unit of risk. Bytes Technology is currently generating about 0.13 per unit of volatility. If you would invest  957,400  in Bytes Technology on January 14, 2025 and sell it today you would earn a total of  241,600  from holding Bytes Technology or generate 25.24% return on investment over 90 days.

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

Trematon Capital Investments  vs.  Bytes Technology

Trematon Capital Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trematon Capital Investments 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bytes Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bytes Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trematon Capital and Bytes Technology

The main advantage of trading using opposite Trematon Capital and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trematon Capital 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 Trematon Capital Investments 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.