Correlation Between Maggie Beer and BKI Investment

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

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

Diversification Opportunities for Maggie Beer and BKI Investment

0.7

Correlation Coefficient

Maggie Beer  BKI Investment

Poor diversification

The 3 months correlation between Maggie and BKI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Maggie Beer Holdings and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment and Maggie Beer 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 Maggie Beer Holdings are associated (or correlated) with BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of Maggie Beer i.e., Maggie Beer and BKI Investment go up and down completely randomly.

Pair Corralation between Maggie Beer and BKI Investment

Assuming the 90 days trading horizon Maggie Beer Holdings is expected to under-perform the BKI Investment. In addition to that, Maggie Beer is 6.52 times more volatile than BKI Investment. It trades about -0.03 of its total potential returns per unit of risk. BKI Investment is currently generating about 0.01 per unit of volatility. If you would invest  171.00  in BKI Investment on October 11, 2024 and sell it today you would earn a total of  2.00  from holding BKI Investment or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Maggie Beer Holdings  vs.  BKI Investment

Maggie Beer Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maggie Beer Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BKI Investment

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Maggie Beer and BKI Investment

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

The idea behind Maggie Beer Holdings and BKI Investment 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.