Correlation Between BK Technologies and Valeura Energy
Can any of the company-specific risk be diversified away by investing in both BK Technologies and Valeura Energy 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 Valeura Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BK Technologies and Valeura Energy, you can compare the effects of market volatilities on BK Technologies and Valeura Energy 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 Valeura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BK Technologies and Valeura Energy.
Diversification Opportunities for BK Technologies and Valeura Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BKTI and Valeura is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BK Technologies and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of BK Technologies i.e., BK Technologies and Valeura Energy go up and down completely randomly.
Pair Corralation between BK Technologies and Valeura Energy
Given the investment horizon of 90 days BK Technologies is expected to generate 1.33 times more return on investment than Valeura Energy. However, BK Technologies is 1.33 times more volatile than Valeura Energy. It trades about 0.16 of its potential returns per unit of risk. Valeura Energy is currently generating about 0.14 per unit of risk. If you would invest 1,349 in BK Technologies on October 16, 2024 and sell it today you would earn a total of 1,762 from holding BK Technologies or generate 130.62% 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. Valeura Energy
Performance |
| Timeline |
| BK Technologies |
| Valeura Energy |
BK Technologies and Valeura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BK Technologies and Valeura Energy
The main advantage of trading using opposite BK Technologies and Valeura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BK Technologies position performs unexpectedly, Valeura Energy 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 Valeura Energy will offset losses from the drop in Valeura Energy's long position.| BK Technologies vs. Frequency Electronics | BK Technologies vs. Actelis Networks | BK Technologies vs. Optical Cable | BK Technologies vs. Baylin Technologies |
| Valeura Energy vs. ReTo Eco Solutions | Valeura Energy vs. Old Republic International | Valeura Energy vs. Shenzhen Investment Holdings | Valeura Energy vs. SM Investments |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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