Correlation Between BK Technologies and Silicom
Can any of the company-specific risk be diversified away by investing in both BK Technologies and Silicom 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 Silicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BK Technologies and Silicom, you can compare the effects of market volatilities on BK Technologies and Silicom 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 Silicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of BK Technologies and Silicom.
Diversification Opportunities for BK Technologies and Silicom
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BKTI and Silicom is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BK Technologies and Silicom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicom 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 Silicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicom has no effect on the direction of BK Technologies i.e., BK Technologies and Silicom go up and down completely randomly.
Pair Corralation between BK Technologies and Silicom
Given the investment horizon of 90 days BK Technologies is expected to generate 1.47 times more return on investment than Silicom. However, BK Technologies is 1.47 times more volatile than Silicom. It trades about 0.06 of its potential returns per unit of risk. Silicom is currently generating about -0.07 per unit of risk. If you would invest 1,430 in BK Technologies on September 2, 2024 and sell it today you would earn a total of 1,888 from holding BK Technologies or generate 132.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BK Technologies vs. Silicom
Performance |
| Timeline |
| BK Technologies |
| Silicom |
BK Technologies and Silicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BK Technologies and Silicom
The main advantage of trading using opposite BK Technologies and Silicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BK Technologies position performs unexpectedly, Silicom 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 Silicom will offset losses from the drop in Silicom's long position.| BK Technologies vs. Frequency Electronics | BK Technologies vs. Actelis Networks | BK Technologies vs. Optical Cable | BK Technologies vs. Baylin Technologies |
| Silicom vs. Ituran Location and | Silicom vs. Sapiens International | Silicom vs. Allot Communications | Silicom vs. Radcom |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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