Correlation Between Park Electrochemical and BGC

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

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

Diversification Opportunities for Park Electrochemical and BGC

0.12

Correlation Coefficient

Park Electrochemical  BGC

Average diversification

The 3 months correlation between Park and BGC is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and BGC Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGC Group and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with BGC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGC Group has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and BGC go up and down completely randomly.

Pair Corralation between Park Electrochemical and BGC

Considering the 90-day investment horizon Park Electrochemical is expected to generate 0.94 times more return on investment than BGC. However, Park Electrochemical is 1.06 times less risky than BGC. It trades about 0.05 of its potential returns per unit of risk. BGC Group is currently generating about 0.03 per unit of risk. If you would invest  1,393  in Park Electrochemical on October 25, 2024 and sell it today you would earn a total of  62.00  from holding Park Electrochemical or generate 4.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Park Electrochemical  vs.  BGC Group

Park Electrochemical

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Park Electrochemical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, Park Electrochemical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BGC Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BGC Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, BGC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Park Electrochemical and BGC

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

The idea behind Park Electrochemical and BGC Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.