Correlation Between CK Power and BCPG Public

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

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

Diversification Opportunities for CK Power and BCPG Public

0.95

Correlation Coefficient

CK Power  BCPG Public

Almost no diversification

The 3 months correlation between CKP and BCPG is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CK Power Public and BCPG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCPG Public and CK Power 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 CK Power Public are associated (or correlated) with BCPG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCPG Public has no effect on the direction of CK Power i.e., CK Power and BCPG Public go up and down completely randomly.

Pair Corralation between CK Power and BCPG Public

Assuming the 90 days trading horizon CK Power Public is expected to generate 0.96 times more return on investment than BCPG Public. However, CK Power Public is 1.05 times less risky than BCPG Public. It trades about -0.06 of its potential returns per unit of risk. BCPG Public is currently generating about -0.11 per unit of risk. If you would invest  322.00  in CK Power Public on October 8, 2024 and sell it today you would lose (8.00) from holding CK Power Public or give up 2.48% of portfolio value over 90 days.

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

CK Power Public  vs.  BCPG Public

CK Power Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

BCPG Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCPG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with CK Power and BCPG Public

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

The idea behind CK Power Public and BCPG Public 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.