Correlation Between BKI Investment and Farm Pride
Can any of the company-specific risk be diversified away by investing in both BKI Investment and Farm Pride 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 Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKI Investment and Farm Pride Foods, you can compare the effects of market volatilities on BKI Investment and Farm Pride 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 Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Farm Pride.
Diversification Opportunities for BKI Investment and Farm Pride
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BKI and Farm is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Farm Pride Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Pride Foods 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 Farm Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Pride Foods has no effect on the direction of BKI Investment i.e., BKI Investment and Farm Pride go up and down completely randomly.
Pair Corralation between BKI Investment and Farm Pride
Assuming the 90 days trading horizon BKI Investment is expected to generate 0.08 times more return on investment than Farm Pride. However, BKI Investment is 11.85 times less risky than Farm Pride. It trades about -0.06 of its potential returns per unit of risk. Farm Pride Foods is currently generating about -0.05 per unit of risk. If you would invest 172.00 in BKI Investment on September 15, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BKI Investment vs. Farm Pride Foods
Performance |
| Timeline |
| BKI Investment |
| Farm Pride Foods |
BKI Investment and Farm Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BKI Investment and Farm Pride
The main advantage of trading using opposite BKI Investment and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment position performs unexpectedly, Farm Pride 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 Farm Pride will offset losses from the drop in Farm Pride's long position.| BKI Investment vs. Australian Foundation Investment | BKI Investment vs. Metrics Master Income | BKI Investment vs. L1 Long Short | BKI Investment vs. Wam Leaders |
| Farm Pride vs. ARN Media Limited | Farm Pride vs. Premier Investments | Farm Pride vs. BKI Investment | Farm Pride vs. Garda Diversified Ppty |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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