Correlation Between BK Technologies and TESSCO Technologies

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

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

Diversification Opportunities for BK Technologies and TESSCO Technologies

0.84

Correlation Coefficient

BK Technologies  TESSCO Technologies

Very poor diversification

The 3 months correlation between BKTI and TESSCO is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BK Technologies and TESSCO Technologies Incorporat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESSCO Technologies 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 TESSCO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESSCO Technologies has no effect on the direction of BK Technologies i.e., BK Technologies and TESSCO Technologies go up and down completely randomly.

Pair Corralation between BK Technologies and TESSCO Technologies

If you would invest  2,799  in BK Technologies on September 1, 2024 and sell it today you would earn a total of  519.00  from holding BK Technologies or generate 18.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

BK Technologies  vs.  TESSCO Technologies Incorporat

BK Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BK Technologies are ranked lower than 11 (%) 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.

TESSCO Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BK Technologies and TESSCO Technologies

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

The idea behind BK Technologies and TESSCO Technologies Incorporated 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..