Correlation Between Kellanova and BK Technologies

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

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

Diversification Opportunities for Kellanova and BK Technologies

-0.76

Correlation Coefficient

Kellanova  BK Technologies

Pay attention - limited upside

The 3 months correlation between Kellanova and BKTI is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and BK Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK Technologies and Kellanova 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 Kellanova are associated (or correlated) with BK Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BK Technologies has no effect on the direction of Kellanova i.e., Kellanova and BK Technologies go up and down completely randomly.

Pair Corralation between Kellanova and BK Technologies

Taking into account the 90-day investment horizon Kellanova is expected to generate 1.17 times less return on investment than BK Technologies. But when comparing it to its historical volatility, Kellanova is 26.94 times less risky than BK Technologies. It trades about 0.29 of its potential returns per unit of risk. BK Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,187  in BK Technologies on December 18, 2024 and sell it today you would lose (101.00) from holding BK Technologies or give up 3.17% of portfolio value over 90 days.

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

Kellanova  vs.  BK Technologies

Kellanova

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kellanova is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

BK Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BK Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BK Technologies is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kellanova and BK Technologies

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

The idea behind Kellanova and BK Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.