Correlation Between Kali and BC Bud

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

By analyzing existing cross correlation between Kali Inc and The BC Bud, you can compare the effects of market volatilities on Kali and BC Bud 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 Kali with a short position of BC Bud. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kali and BC Bud.

Diversification Opportunities for Kali and BC Bud

0.0

Correlation Coefficient

Kali  BC Bud

Pay attention - limited upside

The 3 months correlation between Kali and BCBCF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kali Inc and The BC Bud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Bud and Kali 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 Kali Inc are associated (or correlated) with BC Bud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Bud has no effect on the direction of Kali i.e., Kali and BC Bud go up and down completely randomly.

Pair Corralation between Kali and BC Bud

If you would invest  0.88  in The BC Bud on September 19, 2024 and sell it today you would earn a total of  6.31  from holding The BC Bud or generate 717.05% return on investment over 90 days.

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

Kali Inc  vs.  The BC Bud

Kali Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kali Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Kali is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BC Bud

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The BC Bud are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, BC Bud reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kali and BC Bud

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

The idea behind Kali Inc and The BC Bud 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.