Correlation Between SecureTech Innovations and BKV

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

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

Diversification Opportunities for SecureTech Innovations and BKV

-0.11

Correlation Coefficient

SecureTech Innovations  BKV

Good diversification

The 3 months correlation between SecureTech and BKV is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SecureTech Innovations and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation and SecureTech Innovations 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 SecureTech Innovations 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 SecureTech Innovations i.e., SecureTech Innovations and BKV go up and down completely randomly.

Pair Corralation between SecureTech Innovations and BKV

Given the investment horizon of 90 days SecureTech Innovations is expected to generate 10.75 times more return on investment than BKV. However, SecureTech Innovations is 10.75 times more volatile than BKV Corporation. It trades about 0.07 of its potential returns per unit of risk. BKV Corporation is currently generating about 0.18 per unit of risk. If you would invest  100.00  in SecureTech Innovations on September 24, 2024 and sell it today you would earn a total of  0.00  from holding SecureTech Innovations or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

SecureTech Innovations  vs.  BKV Corp.

SecureTech Innovations

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SecureTech Innovations are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, SecureTech Innovations demonstrated solid returns over the last few months and may actually be approaching a breakup point.

BKV Corporation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 13 (%) 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 SecureTech Innovations and BKV

The main advantage of trading using opposite SecureTech Innovations and BKV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SecureTech Innovations 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 SecureTech Innovations 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.