Correlation Between Nates Food and BK Technologies

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

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

Diversification Opportunities for Nates Food and BK Technologies

-0.11

Correlation Coefficient

Nates Food  BK Technologies

Good diversification

The 3 months correlation between Nates and BKTI is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nates Food Co and BK Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK Technologies and Nates Food 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 Nates Food Co 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 Nates Food i.e., Nates Food and BK Technologies go up and down completely randomly.

Pair Corralation between Nates Food and BK Technologies

Given the investment horizon of 90 days Nates Food Co is expected to generate 79.47 times more return on investment than BK Technologies. However, Nates Food is 79.47 times more volatile than BK Technologies. It trades about 0.35 of its potential returns per unit of risk. BK Technologies is currently generating about 0.1 per unit of risk. If you would invest  0.01  in Nates Food Co on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Nates Food Co or generate 0.0% return on investment over 90 days.

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

Nates Food Co  vs.  BK Technologies

Nates Food

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nates Food Co are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Nates Food exhibited solid returns over the last few months and may actually be approaching a breakup point.

BK Technologies

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BK Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, BK Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nates Food and BK Technologies

The main advantage of trading using opposite Nates Food and BK Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nates Food 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 Nates Food Co 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.