Correlation Between Valeo SE and BKV

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

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

Diversification Opportunities for Valeo SE and BKV

-0.3

Correlation Coefficient

Valeo SE  BKV

Very good diversification

The 3 months correlation between Valeo and BKV is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Valeo SE and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation and Valeo SE 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 Valeo SE are associated (or correlated) with BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of Valeo SE i.e., Valeo SE and BKV go up and down completely randomly.

Pair Corralation between Valeo SE and BKV

Assuming the 90 days horizon Valeo SE is expected to generate 1.05 times more return on investment than BKV. However, Valeo SE is 1.05 times more volatile than BKV Corporation. It trades about 0.13 of its potential returns per unit of risk. BKV Corporation is currently generating about -0.02 per unit of risk. If you would invest  919.00  in Valeo SE on December 24, 2024 and sell it today you would earn a total of  171.00  from holding Valeo SE or generate 18.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.25%
Values	Daily Returns

Valeo SE  vs.  BKV Corp.

Valeo SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valeo SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Valeo SE reported solid returns over the last few months and may actually be approaching a breakup point.

BKV Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days BKV Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, BKV is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Valeo SE and BKV

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

The idea behind Valeo SE and BKV Corporation 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.