Correlation Between BKI Investment and Super Retail

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

By analyzing existing cross correlation between BKI Investment and Super Retail Group, you can compare the effects of market volatilities on BKI Investment and Super Retail 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 Super Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Super Retail.

Diversification Opportunities for BKI Investment and Super Retail

0.38

Correlation Coefficient

BKI Investment  Super Retail

Weak diversification

The 3 months correlation between BKI and Super is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Super Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Retail Group 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 Super Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Retail Group has no effect on the direction of BKI Investment i.e., BKI Investment and Super Retail go up and down completely randomly.

Pair Corralation between BKI Investment and Super Retail

Assuming the 90 days trading horizon BKI Investment is expected to generate 8.39 times less return on investment than Super Retail. But when comparing it to its historical volatility, BKI Investment is 2.11 times less risky than Super Retail. It trades about 0.01 of its potential returns per unit of risk. Super Retail Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  976.00  in Super Retail Group on September 2, 2024 and sell it today you would earn a total of  497.00  from holding Super Retail Group or generate 50.92% return on investment over 90 days.

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

BKI Investment  vs.  Super Retail Group

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.

Super Retail Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super Retail Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BKI Investment and Super Retail

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

The idea behind BKI Investment and Super Retail Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.