Correlation Between BKV and Mytilineos

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

By analyzing existing cross correlation between BKV Corporation and Mytilineos SA, you can compare the effects of market volatilities on BKV and Mytilineos 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 BKV with a short position of Mytilineos. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKV and Mytilineos.

Diversification Opportunities for BKV and Mytilineos

-0.9

Correlation Coefficient

BKV  Mytilineos

Pay attention - limited upside

The 3 months correlation between BKV and Mytilineos is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. and Mytilineos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mytilineos SA and BKV 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 BKV Corporation are associated (or correlated) with Mytilineos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mytilineos SA has no effect on the direction of BKV i.e., BKV and Mytilineos go up and down completely randomly.

Pair Corralation between BKV and Mytilineos

Considering the 90-day investment horizon BKV Corporation is expected to generate 5.45 times more return on investment than Mytilineos. However, BKV is 5.45 times more volatile than Mytilineos SA. It trades about 0.07 of its potential returns per unit of risk. Mytilineos SA is currently generating about -0.08 per unit of risk. If you would invest  2,196  in BKV Corporation on September 29, 2024 and sell it today you would earn a total of  57.00  from holding BKV Corporation or generate 2.6% return on investment over 90 days.

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

BKV Corp.  vs.  Mytilineos SA

BKV Corporation

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Mytilineos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mytilineos SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BKV and Mytilineos

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

The idea behind BKV Corporation and Mytilineos SA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.