Correlation Between BKI Investment and Aruma Resources

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BKI Investment  vs.  Aruma Resources

 Performance 
       Timeline  
BKI Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BKI Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, BKI Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Aruma Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aruma Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.
The idea behind BKI Investment and Aruma Resources 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.
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.

Other Complementary Tools

Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Bonds Directory
Find actively traded corporate debentures issued by US companies
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios