Correlation Between Mynaric AG and BK Technologies

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

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

Diversification Opportunities for Mynaric AG and BK Technologies

0.56

Correlation Coefficient

Mynaric AG  BK Technologies

Very weak diversification

The 3 months correlation between Mynaric and BKTI is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mynaric AG ADR and BK Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK Technologies and Mynaric AG 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 Mynaric AG ADR 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 Mynaric AG i.e., Mynaric AG and BK Technologies go up and down completely randomly.

Pair Corralation between Mynaric AG and BK Technologies

Given the investment horizon of 90 days Mynaric AG ADR is expected to under-perform the BK Technologies. In addition to that, Mynaric AG is 5.7 times more volatile than BK Technologies. It trades about -0.09 of its total potential returns per unit of risk. BK Technologies is currently generating about -0.01 per unit of volatility. If you would invest  3,491  in BK Technologies on December 28, 2024 and sell it today you would lose (291.00) from holding BK Technologies or give up 8.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	61.67%
Values	Daily Returns

Mynaric AG ADR  vs.  BK Technologies

Mynaric AG ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mynaric AG ADR 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BK Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days BK Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Mynaric AG and BK Technologies

The main advantage of trading using opposite Mynaric AG and BK Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mynaric AG 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 Mynaric AG ADR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.