Correlation Between Environmental Clean and BKI Investment
Can any of the company-specific risk be diversified away by investing in both Environmental Clean and BKI Investment 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 Environmental Clean and BKI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Environmental Clean Technologies and BKI Investment, you can compare the effects of market volatilities on Environmental Clean and BKI Investment 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 Environmental Clean with a short position of BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmental Clean and BKI Investment.
Diversification Opportunities for Environmental Clean and BKI Investment
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Environmental and BKI is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Environmental Clean Technologi and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment and Environmental Clean 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 Environmental Clean Technologies are associated (or correlated) with BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of Environmental Clean i.e., Environmental Clean and BKI Investment go up and down completely randomly.
Pair Corralation between Environmental Clean and BKI Investment
Assuming the 90 days trading horizon Environmental Clean Technologies is expected to generate 12.96 times more return on investment than BKI Investment. However, Environmental Clean is 12.96 times more volatile than BKI Investment. It trades about 0.02 of its potential returns per unit of risk. BKI Investment is currently generating about 0.01 per unit of risk. If you would invest 1.30 in Environmental Clean Technologies on September 12, 2024 and sell it today you would lose (1.10) from holding Environmental Clean Technologies or give up 84.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Environmental Clean Technologi vs. BKI Investment
Performance |
| Timeline |
| Environmental Clean |
| BKI Investment |
Environmental Clean and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Environmental Clean and BKI Investment
The main advantage of trading using opposite Environmental Clean and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Environmental Clean position performs unexpectedly, BKI Investment 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 BKI Investment will offset losses from the drop in BKI Investment's long position.| Environmental Clean vs. Aneka Tambang Tbk | Environmental Clean vs. Commonwealth Bank of | Environmental Clean vs. ANZ Group Holdings | Environmental Clean vs. National Australia Bank |
| BKI Investment vs. Group 6 Metals | BKI Investment vs. TTG Fintech | BKI Investment vs. Environmental Clean Technologies | BKI Investment vs. Centuria Industrial Reit |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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