Correlation Between Sysco and BK Technologies

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

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

Diversification Opportunities for Sysco and BK Technologies

0.55

Correlation Coefficient

Sysco  BK Technologies

Very weak diversification

The 3 months correlation between Sysco and BKTI is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sysco and BK Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK Technologies and Sysco 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 Sysco 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 Sysco i.e., Sysco and BK Technologies go up and down completely randomly.

Pair Corralation between Sysco and BK Technologies

Considering the 90-day investment horizon Sysco is expected to under-perform the BK Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Sysco is 8.19 times less risky than BK Technologies. The stock trades about -0.53 of its potential returns per unit of risk. The BK Technologies is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,347  in BK Technologies on October 11, 2024 and sell it today you would lose (140.00) from holding BK Technologies or give up 4.18% of portfolio value over 90 days.

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

Sysco  vs.  BK Technologies

Sysco

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BK Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BK Technologies are ranked lower than 6 (%) 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 Sysco and BK Technologies

The main advantage of trading using opposite Sysco and BK Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sysco 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 Sysco 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.