Correlation Between BK Technologies and Sysco

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

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

Diversification Opportunities for BK Technologies and Sysco

0.41

Correlation Coefficient

BK Technologies  Sysco

Very weak diversification

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

Pair Corralation between BK Technologies and Sysco

Given the investment horizon of 90 days BK Technologies is expected to generate 3.62 times more return on investment than Sysco. However, BK Technologies is 3.62 times more volatile than Sysco. It trades about 0.05 of its potential returns per unit of risk. Sysco is currently generating about 0.01 per unit of risk. If you would invest  1,945  in BK Technologies on October 26, 2024 and sell it today you would earn a total of  1,306  from holding BK Technologies or generate 67.15% return on investment over 90 days.

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

BK Technologies  vs.  Sysco

BK Technologies

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BK Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, BK Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Sysco

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BK Technologies and Sysco

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

The idea behind BK Technologies and Sysco 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.