Correlation Between Crombie Real and BK Technologies

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

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

Diversification Opportunities for Crombie Real and BK Technologies

-0.27

Correlation Coefficient

Crombie Real  BK Technologies

Very good diversification

The 3 months correlation between Crombie and BKTI is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and BK Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK Technologies and Crombie Real 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 Crombie Real Estate 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 Crombie Real i.e., Crombie Real and BK Technologies go up and down completely randomly.

Pair Corralation between Crombie Real and BK Technologies

Assuming the 90 days horizon Crombie Real Estate is expected to under-perform the BK Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Crombie Real Estate is 2.66 times less risky than BK Technologies. The pink sheet trades about -0.21 of its potential returns per unit of risk. The BK Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,479  in BK Technologies on February 5, 2024 and sell it today you would earn a total of  12.00  from holding BK Technologies or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Crombie Real Estate  vs.  BK Technologies

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crombie Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Crombie Real is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BK Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BK Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, BK Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crombie Real and BK Technologies

The main advantage of trading using opposite Crombie Real and BK Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crombie Real 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 Crombie Real Estate 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.