Correlation Between BKI Investment and Alternative Investment

Can any of the company-specific risk be diversified away by investing in both BKI Investment and Alternative 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 BKI Investment and Alternative Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BKI Investment and Alternative Investment Trust, you can compare the effects of market volatilities on BKI Investment and Alternative 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 BKI Investment with a short position of Alternative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Alternative Investment.

Diversification Opportunities for BKI Investment and Alternative Investment

-0.11

Correlation Coefficient

BKI Investment  Alternative Investment

Good diversification

The 3 months correlation between BKI and Alternative is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment and BKI Investment 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 BKI Investment are associated (or correlated) with Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of BKI Investment i.e., BKI Investment and Alternative Investment go up and down completely randomly.

Pair Corralation between BKI Investment and Alternative Investment

Assuming the 90 days trading horizon BKI Investment is expected to generate 4.78 times less return on investment than Alternative Investment. In addition to that, BKI Investment is 1.51 times more volatile than Alternative Investment Trust. It trades about 0.02 of its total potential returns per unit of risk. Alternative Investment Trust is currently generating about 0.11 per unit of volatility. If you would invest  139.00  in Alternative Investment Trust on September 4, 2024 and sell it today you would earn a total of  5.00  from holding Alternative Investment Trust or generate 3.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

BKI Investment  vs.  Alternative Investment Trust

BKI Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BKI Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, BKI Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Alternative Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Investment Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alternative Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BKI Investment and Alternative Investment

The main advantage of trading using opposite BKI Investment and Alternative Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment position performs unexpectedly, Alternative 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 Alternative Investment will offset losses from the drop in Alternative Investment's long position.

The idea behind BKI Investment and Alternative Investment Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.