Correlation Between BKI Investment and Energy Technologies
Can any of the company-specific risk be diversified away by investing in both BKI Investment and Energy Technologies 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 Energy Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKI Investment and Energy Technologies Limited, you can compare the effects of market volatilities on BKI Investment and Energy Technologies 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 Energy Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Energy Technologies.
Diversification Opportunities for BKI Investment and Energy Technologies
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between BKI and Energy is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Energy Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Technologies 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 Energy Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Technologies has no effect on the direction of BKI Investment i.e., BKI Investment and Energy Technologies go up and down completely randomly.
Pair Corralation between BKI Investment and Energy Technologies
Assuming the 90 days trading horizon BKI Investment is expected to generate 0.22 times more return on investment than Energy Technologies. However, BKI Investment is 4.64 times less risky than Energy Technologies. It trades about 0.1 of its potential returns per unit of risk. Energy Technologies Limited is currently generating about -0.12 per unit of risk. If you would invest 171.00 in BKI Investment on November 3, 2024 and sell it today you would earn a total of 3.00 from holding BKI Investment or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BKI Investment vs. Energy Technologies Limited
Performance |
| Timeline |
| BKI Investment |
| Energy Technologies |
BKI Investment and Energy Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BKI Investment and Energy Technologies
The main advantage of trading using opposite BKI Investment and Energy Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment position performs unexpectedly, Energy Technologies 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 Energy Technologies will offset losses from the drop in Energy Technologies' long position.| BKI Investment vs. Autosports Group | BKI Investment vs. Ras Technology Holdings | BKI Investment vs. Nufarm Finance NZ | BKI Investment vs. Beston Global Food |
| Energy Technologies vs. Beston Global Food | Energy Technologies vs. Oneview Healthcare PLC | Energy Technologies vs. Talisman Mining | Energy Technologies vs. Metro Mining |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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