Correlation Between Yellow Pages and BKV

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

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

Diversification Opportunities for Yellow Pages and BKV

0.85

Correlation Coefficient

Yellow Pages  BKV

Very poor diversification

The 3 months correlation between Yellow and BKV is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation and Yellow Pages 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 Yellow Pages Limited 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 Yellow Pages i.e., Yellow Pages and BKV go up and down completely randomly.

Pair Corralation between Yellow Pages and BKV

Assuming the 90 days horizon Yellow Pages is expected to generate 30.23 times less return on investment than BKV. In addition to that, Yellow Pages is 2.38 times more volatile than BKV Corporation. It trades about 0.0 of its total potential returns per unit of risk. BKV Corporation is currently generating about 0.19 per unit of volatility. If you would invest  1,800  in BKV Corporation on September 24, 2024 and sell it today you would earn a total of  397.00  from holding BKV Corporation or generate 22.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	19.38%
Values	Daily Returns

Yellow Pages Limited  vs.  BKV Corp.

Yellow Pages Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Yellow Pages may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BKV Corporation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yellow Pages and BKV

The main advantage of trading using opposite Yellow Pages and BKV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yellow Pages 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 Yellow Pages Limited 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.