Correlation Between BKI Investment and Prime Financial
Can any of the company-specific risk be diversified away by investing in both BKI Investment and Prime Financial 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 Prime Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKI Investment and Prime Financial Group, you can compare the effects of market volatilities on BKI Investment and Prime Financial 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 Prime Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Prime Financial.
Diversification Opportunities for BKI Investment and Prime Financial
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BKI and Prime is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Prime Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Financial Group 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 Prime Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Financial Group has no effect on the direction of BKI Investment i.e., BKI Investment and Prime Financial go up and down completely randomly.
Pair Corralation between BKI Investment and Prime Financial
Assuming the 90 days trading horizon BKI Investment is expected to generate 0.26 times more return on investment than Prime Financial. However, BKI Investment is 3.78 times less risky than Prime Financial. It trades about 0.0 of its potential returns per unit of risk. Prime Financial Group is currently generating about -0.08 per unit of risk. If you would invest 172.00 in BKI Investment on September 1, 2024 and sell it today you would earn a total of 0.00 from holding BKI Investment or generate 0.0% 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. Prime Financial Group
Performance |
| Timeline |
| BKI Investment |
| Prime Financial Group |
BKI Investment and Prime Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BKI Investment and Prime Financial
The main advantage of trading using opposite BKI Investment and Prime Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment position performs unexpectedly, Prime Financial 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 Prime Financial will offset losses from the drop in Prime Financial's long position.| BKI Investment vs. GQG Partners DRC | BKI Investment vs. MFF Capital Investments | BKI Investment vs. Metrics Master Income | BKI Investment vs. L1 Long Short |
| Prime Financial vs. WA1 Resources | Prime Financial vs. Predictive Discovery | Prime Financial vs. Cooper Metals | Prime Financial vs. OD6 Metals |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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