Correlation Between PKSHA TECHNOLOGY and BG Foods

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

By analyzing existing cross correlation between PKSHA TECHNOLOGY INC and BG Foods, you can compare the effects of market volatilities on PKSHA TECHNOLOGY and BG Foods 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 PKSHA TECHNOLOGY with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and BG Foods.

Diversification Opportunities for PKSHA TECHNOLOGY and BG Foods

-0.41

Correlation Coefficient

PKSHA TECHNOLOGY  BG Foods

Very good diversification

The 3 months correlation between PKSHA and DHR is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and BG Foods go up and down completely randomly.

Pair Corralation between PKSHA TECHNOLOGY and BG Foods

Assuming the 90 days horizon PKSHA TECHNOLOGY INC is expected to under-perform the BG Foods. But the stock apears to be less risky and, when comparing its historical volatility, PKSHA TECHNOLOGY INC is 1.48 times less risky than BG Foods. The stock trades about -0.27 of its potential returns per unit of risk. The BG Foods is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  613.00  in BG Foods on October 6, 2024 and sell it today you would earn a total of  73.00  from holding BG Foods or generate 11.91% return on investment over 90 days.

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

PKSHA TECHNOLOGY INC  vs.  BG Foods

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PKSHA TECHNOLOGY INC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PKSHA TECHNOLOGY reported solid returns over the last few months and may actually be approaching a breakup point.

BG Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BG Foods is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PKSHA TECHNOLOGY and BG Foods

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

The idea behind PKSHA TECHNOLOGY INC and BG Foods 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.