Correlation Between Associates First and BKES

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

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

Diversification Opportunities for Associates First and BKES

0.0

Correlation Coefficient

Associates First  BKES

Pay attention - limited upside

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

Pair Corralation between Associates First and BKES

Given the investment horizon of 90 days Associates First Capital is expected to generate 58.55 times more return on investment than BKES. However, Associates First is 58.55 times more volatile than BKES. It trades about 0.04 of its potential returns per unit of risk. BKES is currently generating about -0.02 per unit of risk. If you would invest  0.01  in Associates First Capital on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Associates First Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	25.66%
Values	Daily Returns

Associates First Capital  vs.  BKES

Associates First Capital

Risk-Adjusted Performance

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Very Weak

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

BKES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BKES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BKES is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Associates First and BKES

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

The idea behind Associates First Capital and BKES 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.