Correlation Between BK Technologies and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both BK Technologies and Weibo Corp 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 Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BK Technologies and Weibo Corp, you can compare the effects of market volatilities on BK Technologies and Weibo Corp 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 Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BK Technologies and Weibo Corp.
Diversification Opportunities for BK Technologies and Weibo Corp
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BKTI and Weibo is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding BK Technologies and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp 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 Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of BK Technologies i.e., BK Technologies and Weibo Corp go up and down completely randomly.
Pair Corralation between BK Technologies and Weibo Corp
Given the investment horizon of 90 days BK Technologies is expected to generate 2.88 times less return on investment than Weibo Corp. In addition to that, BK Technologies is 1.81 times more volatile than Weibo Corp. It trades about 0.01 of its total potential returns per unit of risk. Weibo Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,001 in Weibo Corp on December 18, 2024 and sell it today you would earn a total of 89.00 from holding Weibo Corp or generate 8.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
BK Technologies vs. Weibo Corp
Performance |
Timeline |
BK Technologies |
Weibo Corp |
BK Technologies and Weibo Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BK Technologies and Weibo Corp
The main advantage of trading using opposite BK Technologies and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BK Technologies position performs unexpectedly, Weibo Corp 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 Weibo Corp will offset losses from the drop in Weibo Corp's long position.BK Technologies vs. Frequency Electronics | BK Technologies vs. Actelis Networks | BK Technologies vs. Optical Cable | BK Technologies vs. Baylin Technologies |
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Check out your portfolio center.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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