Correlation Between BK Technologies and GEN Restaurant

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

By analyzing existing cross correlation between BK Technologies and GEN Restaurant Group,, you can compare the effects of market volatilities on BK Technologies and GEN Restaurant 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 BK Technologies with a short position of GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of BK Technologies and GEN Restaurant.

Diversification Opportunities for BK Technologies and GEN Restaurant

0.65

Correlation Coefficient

BK Technologies  GEN Restaurant

Poor diversification

The 3 months correlation between BKTI and GEN is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BK Technologies and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, and BK Technologies 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 BK Technologies are associated (or correlated) with GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of BK Technologies i.e., BK Technologies and GEN Restaurant go up and down completely randomly.

Pair Corralation between BK Technologies and GEN Restaurant

Given the investment horizon of 90 days BK Technologies is expected to generate 1.1 times more return on investment than GEN Restaurant. However, BK Technologies is 1.1 times more volatile than GEN Restaurant Group,. It trades about -0.03 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.06 per unit of risk. If you would invest  3,455  in BK Technologies on December 17, 2024 and sell it today you would lose (502.00) from holding BK Technologies or give up 14.53% of portfolio value over 90 days.

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

BK Technologies  vs.  GEN Restaurant Group,

BK Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days BK Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

GEN Restaurant Group,

Risk-Adjusted Performance

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with BK Technologies and GEN Restaurant

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

The idea behind BK Technologies and GEN Restaurant 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.