Correlation Between BKI Investment and Australian Strategic
Can any of the company-specific risk be diversified away by investing in both BKI Investment and Australian Strategic 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 Australian Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKI Investment and Australian Strategic Materials, you can compare the effects of market volatilities on BKI Investment and Australian Strategic 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 Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Australian Strategic.
Diversification Opportunities for BKI Investment and Australian Strategic
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BKI and Australian is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic 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 Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of BKI Investment i.e., BKI Investment and Australian Strategic go up and down completely randomly.
Pair Corralation between BKI Investment and Australian Strategic
Assuming the 90 days trading horizon BKI Investment is expected to generate 0.16 times more return on investment than Australian Strategic. However, BKI Investment is 6.13 times less risky than Australian Strategic. It trades about 0.01 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.02 per unit of risk. If you would invest 166.00 in BKI Investment on September 12, 2024 and sell it today you would earn a total of 5.00 from holding BKI Investment or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BKI Investment vs. Australian Strategic Materials
Performance |
| Timeline |
| BKI Investment |
| Australian Strategic |
BKI Investment and Australian Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BKI Investment and Australian Strategic
The main advantage of trading using opposite BKI Investment and Australian Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment position performs unexpectedly, Australian Strategic 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 Australian Strategic will offset losses from the drop in Australian Strategic's long position.| BKI Investment vs. Group 6 Metals | BKI Investment vs. TTG Fintech | BKI Investment vs. Environmental Clean Technologies | BKI Investment vs. Centuria Industrial Reit |
| Australian Strategic vs. Australian United Investment | Australian Strategic vs. BKI Investment | Australian Strategic vs. Perseus Mining | Australian Strategic vs. MFF Capital Investments |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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