Correlation Between BKI Investment and Aruma Resources
Can any of the company-specific risk be diversified away by investing in both BKI Investment and Aruma Resources 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 BKI Investment and Aruma Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKI Investment and Aruma Resources, you can compare the effects of market volatilities on BKI Investment and Aruma Resources 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 BKI Investment with a short position of Aruma Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Aruma Resources.
Diversification Opportunities for BKI Investment and Aruma Resources
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between BKI and Aruma is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Aruma Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aruma Resources and BKI Investment 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 BKI Investment are associated (or correlated) with Aruma Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aruma Resources has no effect on the direction of BKI Investment i.e., BKI Investment and Aruma Resources go up and down completely randomly.
Pair Corralation between BKI Investment and Aruma Resources
Assuming the 90 days trading horizon BKI Investment is expected to generate 0.07 times more return on investment than Aruma Resources. However, BKI Investment is 13.89 times less risky than Aruma Resources. It trades about -0.06 of its potential returns per unit of risk. Aruma Resources is currently generating about -0.07 per unit of risk. If you would invest 172.00 in BKI Investment on September 13, 2024 and sell it today you would lose (1.00) from holding BKI Investment or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BKI Investment vs. Aruma Resources
Performance |
| Timeline |
| BKI Investment |
| Aruma Resources |
BKI Investment and Aruma Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BKI Investment and Aruma Resources
The main advantage of trading using opposite BKI Investment and Aruma Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment position performs unexpectedly, Aruma Resources 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 Aruma Resources will offset losses from the drop in Aruma Resources' long position.| BKI Investment vs. Australian Foundation Investment | BKI Investment vs. MFF Capital Investments | BKI Investment vs. Metrics Master Income | BKI Investment vs. L1 Long Short |
| Aruma Resources vs. MA Financial Group | Aruma Resources vs. Qbe Insurance Group | Aruma Resources vs. Oceania Healthcare | Aruma Resources vs. Medibank Private |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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