Correlation Between BKI Investment and Mount Gibson

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

By analyzing existing cross correlation between BKI Investment and Mount Gibson Iron, you can compare the effects of market volatilities on BKI Investment and Mount Gibson 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 Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Mount Gibson.

Diversification Opportunities for BKI Investment and Mount Gibson

0.5

Correlation Coefficient

BKI Investment  Mount Gibson

Very weak diversification

The 3 months correlation between BKI and Mount is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron 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 Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of BKI Investment i.e., BKI Investment and Mount Gibson go up and down completely randomly.

Pair Corralation between BKI Investment and Mount Gibson

Assuming the 90 days trading horizon BKI Investment is expected to generate 0.28 times more return on investment than Mount Gibson. However, BKI Investment is 3.55 times less risky than Mount Gibson. It trades about 0.02 of its potential returns per unit of risk. Mount Gibson Iron is currently generating about -0.07 per unit of risk. If you would invest  165.00  in BKI Investment on September 4, 2024 and sell it today you would earn a total of  6.00  from holding BKI Investment or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BKI Investment  vs.  Mount Gibson Iron

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.

Mount Gibson Iron

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mount Gibson Iron are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mount Gibson unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BKI Investment and Mount Gibson

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

The idea behind BKI Investment and Mount Gibson Iron 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.