Correlation Between 4 Less and BKV

Can any of the company-specific risk be diversified away by investing in both 4 Less and BKV 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 4 Less and BKV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4 Less Group and BKV Corporation, you can compare the effects of market volatilities on 4 Less and BKV 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 4 Less with a short position of BKV. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4 Less and BKV.

Diversification Opportunities for 4 Less and BKV

-0.47

Correlation Coefficient

4 Less  BKV

Very good diversification

The 3 months correlation between FLES and BKV is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding 4 Less Group and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation and 4 Less 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 4 Less Group are associated (or correlated) with BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of 4 Less i.e., 4 Less and BKV go up and down completely randomly.

Pair Corralation between 4 Less and BKV

Given the investment horizon of 90 days 4 Less Group is expected to generate 12.17 times more return on investment than BKV. However, 4 Less is 12.17 times more volatile than BKV Corporation. It trades about 0.05 of its potential returns per unit of risk. BKV Corporation is currently generating about 0.19 per unit of risk. If you would invest  0.04  in 4 Less Group on September 25, 2024 and sell it today you would lose (0.02) from holding 4 Less Group or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

4 Less Group  vs.  BKV Corp.

4 Less Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 4 Less Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, 4 Less unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with 4 Less and BKV

The main advantage of trading using opposite 4 Less and BKV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4 Less position performs unexpectedly, BKV 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 BKV will offset losses from the drop in BKV's long position.

The idea behind 4 Less Group and BKV Corporation 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 CEOs Directory module to screen CEOs from public companies around the world.