Correlation Between Health and BKI Investment
Can any of the company-specific risk be diversified away by investing in both Health 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 Health and BKI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health and Plant and BKI Investment, you can compare the effects of market volatilities on Health 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 Health with a short position of BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health and BKI Investment.
Diversification Opportunities for Health and BKI Investment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Health and BKI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health and Plant and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment and Health 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 Health and Plant 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 Health i.e., Health and BKI Investment go up and down completely randomly.
Pair Corralation between Health and BKI Investment
Assuming the 90 days trading horizon Health and Plant is expected to under-perform the BKI Investment. In addition to that, Health is 2.52 times more volatile than BKI Investment. It trades about -0.04 of its total potential returns per unit of risk. BKI Investment is currently generating about 0.02 per unit of volatility. If you would invest 162.00 in BKI Investment on August 27, 2024 and sell it today you would earn a total of 10.00 from holding BKI Investment or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health and Plant vs. BKI Investment
Performance |
| Timeline |
| Health and Plant |
| BKI Investment |
Health and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health and BKI Investment
The main advantage of trading using opposite Health and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health 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.| Health vs. Aurelia Metals | Health vs. Patriot Battery Metals | Health vs. Sky Metals | Health vs. Catalyst Metals |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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