Correlation Between BKV and Continental Aktiengesellscha

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

By analyzing existing cross correlation between BKV Corporation and Continental Aktiengesellschaft, you can compare the effects of market volatilities on BKV and Continental Aktiengesellscha 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 BKV with a short position of Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKV and Continental Aktiengesellscha.

Diversification Opportunities for BKV and Continental Aktiengesellscha

0.49

Correlation Coefficient

BKV  Continental Aktiengesellscha

Very weak diversification

The 3 months correlation between BKV and Continental is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha and BKV 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 BKV Corporation are associated (or correlated) with Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of BKV i.e., BKV and Continental Aktiengesellscha go up and down completely randomly.

Pair Corralation between BKV and Continental Aktiengesellscha

Considering the 90-day investment horizon BKV Corporation is expected to generate 0.48 times more return on investment than Continental Aktiengesellscha. However, BKV Corporation is 2.09 times less risky than Continental Aktiengesellscha. It trades about 0.21 of its potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.04 per unit of risk. If you would invest  1,800  in BKV Corporation on September 26, 2024 and sell it today you would earn a total of  455.00  from holding BKV Corporation or generate 25.28% return on investment over 90 days.

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

BKV Corp.  vs.  Continental Aktiengesellschaft

BKV Corporation

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Continental Aktiengesellscha

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Continental Aktiengesellscha may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BKV and Continental Aktiengesellscha

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

The idea behind BKV Corporation and Continental Aktiengesellschaft 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.