Correlation Between BKV and Trio Tech

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

By analyzing existing cross correlation between BKV Corporation and Trio Tech International, you can compare the effects of market volatilities on BKV and Trio Tech 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 Trio Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKV and Trio Tech.

Diversification Opportunities for BKV and Trio Tech

-0.08

Correlation Coefficient

BKV  Trio Tech

Good diversification

The 3 months correlation between BKV and Trio is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. and Trio Tech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Tech International 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 Trio Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Tech International has no effect on the direction of BKV i.e., BKV and Trio Tech go up and down completely randomly.

Pair Corralation between BKV and Trio Tech

Considering the 90-day investment horizon BKV Corporation is expected to generate 0.52 times more return on investment than Trio Tech. However, BKV Corporation is 1.91 times less risky than Trio Tech. It trades about 0.19 of its potential returns per unit of risk. Trio Tech International is currently generating about 0.08 per unit of risk. If you would invest  1,800  in BKV Corporation on September 25, 2024 and sell it today you would earn a total of  423.50  from holding BKV Corporation or generate 23.53% return on investment over 90 days.

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

BKV Corp.  vs.  Trio Tech International

BKV Corporation

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 15 (%) 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.

Trio Tech International

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with BKV and Trio Tech

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

The idea behind BKV Corporation and Trio Tech International 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.