Correlation Between BK Technologies and Optical Cable
Can any of the company-specific risk be diversified away by investing in both BK Technologies and Optical Cable 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 BK Technologies and Optical Cable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BK Technologies and Optical Cable, you can compare the effects of market volatilities on BK Technologies and Optical Cable 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 BK Technologies with a short position of Optical Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of BK Technologies and Optical Cable.
Diversification Opportunities for BK Technologies and Optical Cable
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BKTI and Optical is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding BK Technologies and Optical Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optical Cable and BK Technologies 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 BK Technologies are associated (or correlated) with Optical Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optical Cable has no effect on the direction of BK Technologies i.e., BK Technologies and Optical Cable go up and down completely randomly.
Pair Corralation between BK Technologies and Optical Cable
Given the investment horizon of 90 days BK Technologies is expected to generate 2.02 times more return on investment than Optical Cable. However, BK Technologies is 2.02 times more volatile than Optical Cable. It trades about 0.23 of its potential returns per unit of risk. Optical Cable is currently generating about 0.0 per unit of risk. If you would invest 2,740 in BK Technologies on August 27, 2024 and sell it today you would earn a total of 565.00 from holding BK Technologies or generate 20.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BK Technologies vs. Optical Cable
Performance |
| Timeline |
| BK Technologies |
| Optical Cable |
BK Technologies and Optical Cable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BK Technologies and Optical Cable
The main advantage of trading using opposite BK Technologies and Optical Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BK Technologies position performs unexpectedly, Optical Cable 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 Optical Cable will offset losses from the drop in Optical Cable's long position.| BK Technologies vs. Frequency Electronics | BK Technologies vs. Actelis Networks | BK Technologies vs. Optical Cable | BK Technologies vs. Baylin Technologies |
| Optical Cable vs. KVH Industries | Optical Cable vs. Knowles Cor | Optical Cable vs. Comtech Telecommunications Corp | Optical Cable vs. Lantronix |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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