Correlation Between BKI Investment and Perpetual Credit

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

By analyzing existing cross correlation between BKI Investment and Perpetual Credit Income, you can compare the effects of market volatilities on BKI Investment and Perpetual Credit 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 BKI Investment with a short position of Perpetual Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Perpetual Credit.

Diversification Opportunities for BKI Investment and Perpetual Credit

-0.5

Correlation Coefficient

BKI Investment  Perpetual Credit

Very good diversification

The 3 months correlation between BKI and Perpetual is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Perpetual Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetual Credit Income and BKI Investment 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 BKI Investment are associated (or correlated) with Perpetual Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetual Credit Income has no effect on the direction of BKI Investment i.e., BKI Investment and Perpetual Credit go up and down completely randomly.

Pair Corralation between BKI Investment and Perpetual Credit

Assuming the 90 days trading horizon BKI Investment is expected to generate 7.05 times less return on investment than Perpetual Credit. But when comparing it to its historical volatility, BKI Investment is 1.41 times less risky than Perpetual Credit. It trades about 0.01 of its potential returns per unit of risk. Perpetual Credit Income is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Perpetual Credit Income on September 19, 2024 and sell it today you would earn a total of  33.00  from holding Perpetual Credit Income or generate 39.76% return on investment over 90 days.

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

BKI Investment  vs.  Perpetual Credit Income

BKI Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Perpetual Credit Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perpetual Credit Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Perpetual Credit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BKI Investment and Perpetual Credit

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

The idea behind BKI Investment and Perpetual Credit Income 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.