Correlation Between BKS Bank and Exor NV

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

By analyzing existing cross correlation between BKS Bank AG and Exor NV, you can compare the effects of market volatilities on BKS Bank and Exor NV 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 BKS Bank with a short position of Exor NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKS Bank and Exor NV.

Diversification Opportunities for BKS Bank and Exor NV

0.58

Correlation Coefficient

BKS Bank  Exor NV

Very weak diversification

The 3 months correlation between BKS and Exor is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BKS Bank AG and Exor NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exor NV and BKS Bank 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 BKS Bank AG are associated (or correlated) with Exor NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exor NV has no effect on the direction of BKS Bank i.e., BKS Bank and Exor NV go up and down completely randomly.

Pair Corralation between BKS Bank and Exor NV

Assuming the 90 days trading horizon BKS Bank is expected to generate 11.65 times less return on investment than Exor NV. But when comparing it to its historical volatility, BKS Bank AG is 1.31 times less risky than Exor NV. It trades about 0.0 of its potential returns per unit of risk. Exor NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,425  in Exor NV on September 16, 2024 and sell it today you would earn a total of  35.00  from holding Exor NV or generate 0.37% return on investment over 90 days.

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

BKS Bank AG  vs.  Exor NV

BKS Bank AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BKS Bank AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, BKS Bank is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Exor NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exor NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Exor NV is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BKS Bank and Exor NV

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

The idea behind BKS Bank AG and Exor NV 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.